    [House Hearing, 111 Congress]
    [From the U.S. Government Publishing Office]

      HEARING TO REVIEW THE IMPACT OF THE INDIRECT LAND USE AND RENEWABLE
               BIOMASS PROVISIONS IN THE RENEWABLE FUEL STANDARD

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

                                    HEARING

                                   BEFORE THE

                     SUBCOMMITTEE ON CONSERVATION, CREDIT,
                              ENERGY, AND RESEARCH

                                     OF THE

                            COMMITTEE ON AGRICULTURE
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED ELEVENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                  MAY 6, 2009

                                   __________

                               Serial No. 111-13

              Printed for the use of the Committee on Agriculture
                             agriculture.house.gov

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    51-922                    WASHINGTON : 2009
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                            COMMITTEE ON AGRICULTURE

                    COLLIN C. PETERSON, Minnesota, Chairman

    TIM HOLDEN, Pennsylvania,            FRANK D. LUCAS, Oklahoma, Ranking
        Vice Chairman                    Minority Member
    MIKE McINTYRE, North Carolina        BOB GOODLATTE, Virginia
    LEONARD L. BOSWELL, Iowa             JERRY MORAN, Kansas
    JOE BACA, California                 TIMOTHY V. JOHNSON, Illinois
    DENNIS A. CARDOZA, California        SAM GRAVES, Missouri
    DAVID SCOTT, Georgia                 MIKE ROGERS, Alabama
    JIM MARSHALL, Georgia                STEVE KING, Iowa
    STEPHANIE HERSETH SANDLIN, South     RANDY NEUGEBAUER, Texas
    Dakota                               K. MICHAEL CONAWAY, Texas
    HENRY CUELLAR, Texas                 JEFF FORTENBERRY, Nebraska
    JIM COSTA, California                JEAN SCHMIDT, Ohio
    BRAD ELLSWORTH, Indiana              ADRIAN SMITH, Nebraska
    TIMOTHY J. WALZ, Minnesota           ROBERT E. LATTA, Ohio
    STEVE KAGEN, Wisconsin               DAVID P. ROE, Tennessee
    KURT SCHRADER, Oregon                BLAINE LUETKEMEYER, Missouri
    DEBORAH L. HALVORSON, Illinois       GLENN THOMPSON, Pennsylvania
    KATHLEEN A. DAHLKEMPER,              BILL CASSIDY, Louisiana
    Pennsylvania                         CYNTHIA M. LUMMIS, Wyoming
    ERIC J.J. MASSA, New York
    BOBBY BRIGHT, Alabama
    BETSY MARKEY, Colorado
    FRANK KRATOVIL, Jr., Maryland
    MARK H. SCHAUER, Michigan
    LARRY KISSELL, North Carolina
    JOHN A. BOCCIERI, Ohio
    SCOTT MURPHY, New York
    EARL POMEROY, North Dakota
    TRAVIS W. CHILDERS, Mississippi
    WALT MINNICK, Idaho

                                     ______

                               Professional Staff

    Robert L. Larew, Chief of Staff      Nicole Scott, Minority Staff
    Andrew W. Baker, Chief Counsel       Director
    April Slayton, Communications
    Director

                                      (ii)

                                     ______

           Subcommittee on Conservation, Credit, Energy, and Research

                       TIM HOLDEN, Pennsylvania, Chairman

    STEPHANIE HERSETH SANDLIN, South     BOB GOODLATTE, Virginia, Ranking
    Dakota                               Minority Member
    DEBORAH L. HALVORSON, Illinois       JERRY MORAN, Kansas
    KATHLEEN A. DAHLKEMPER,              SAM GRAVES, Missouri
    Pennsylvania                         MIKE ROGERS, Alabama
    BETSY MARKEY, Colorado               STEVE KING, Iowa
    MARK H. SCHAUER, Michigan            RANDY NEUGEBAUER, Texas
    LARRY KISSELL, North Carolina        JEAN SCHMIDT, Ohio
    JOHN A. BOCCIERI, Ohio               ADRIAN SMITH, Nebraska
    MIKE McINTYRE, North Carolina        ROBERT E. LATTA, Ohio
    JIM COSTA, California                BLAINE LUETKEMEYER, Missouri
    BRAD ELLSWORTH, Indiana              GLENN THOMPSON, Pennsylvania
    TIMOTHY J. WALZ, Minnesota           BILL CASSIDY, Louisiana
    ERIC J.J. MASSA, New York
    BOBBY BRIGHT, Alabama
    FRANK KRATOVIL, Jr., Maryland
    SCOTT MURPHY, New York
    WALT MINNICK, Idaho
    EARL POMEROY, North Dakota

                   Nona Darrell, Subcommittee Staff Director

                                     (iii)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Goodlatte, Hon. Bob, a Representative in Congress from Virginia,
      opening statement..............................................     3
    Herseth Sandlin, Hon. Stephanie, a Representative in Congress
      from South Dakota, prepared statement..........................     5
    Holden, Hon. Tim, a Representative in Congress from Pennsylvania,
      opening statement..............................................     1
        Submitted material...........................................    98
    Peterson, Hon. Collin C., a Representative in Congress from
      Minnesota, opening statement...................................     4
        Prepared statement...........................................     4
    Smith, Hon. Adrian, a Representative in Congress from Nebraska,
      prepared statement.............................................     7

                                   Witnesses

    Glauber, Ph.D., Joseph, Chief Economist, U.S. Department of
      Agriculture, Washington, D.C...................................     7
        Prepared statement...........................................     9
    Oge, Margo T., Director, Office of Transportation and Air
      Quality, Office of Air and Radiation, U.S. Environmental
      Protection Agency, Washington, D.C.............................    17
        Prepared statement...........................................    18
    Babcock, Ph.D., Bruce A., Professor of Economics and Director,
      Center for Agricultural and Rural Development, Iowa State
      University, Ames, IA...........................................    43
        Prepared statement...........................................    44
    Coleman, R. Brooke, Executive Director, New Fuels Alliance,
      Boston, MA.....................................................    46
        Prepared statement...........................................    48
    Bowdish, Nick, General Manager, Platinum Ethanol, LLC, Arthur, IA    52
        Prepared statement...........................................    54
    Feraci, Manning, Vice President of Federal Affairs, National
      Biodiesel Board, Washington, D.C...............................    58
        Prepared statement...........................................    60
    Pechart, Michael L., Deputy Secretary for Marketing and Economic
      Development and Policy Director, Pennsylvania Department of
      Agriculture, Harrisburg, PA....................................    65
        Prepared statement...........................................    67
    Webster, Anitra B., Owner, Family Forest, Lynchburg, VA,
      Lynchburg, VA; on behalf of American Forest Foundation.........    69
        Prepared statement...........................................    71

                               Submitted Material

    American Soybean Association, submitted statement................    88
    Biotechnology Industry Organization, submitted statement.........    91
    Flederbach, Jr., William E., Executive Vice President, ClimeCo;
      on behalf of PetroAlgae, submitted statement...................    84
    Griesing, Dennis, Vice President, Government Affairs, Soap and
      Detergent Association, submitted statement.....................    87
    Hoeven III, Hon. John H., Governor, State of North Dakota;
      Chairman, Governors' Biofuels Coalition; and Hon. Chester J.
      ``Chet'' Culver, Governor, State of Iowa; Vice Chairman,
      Governors' Biofuels Coalition, submitted joint statement.......    83
    National Alliance of Forest Owners, submitted statement..........    96
    Society of American Foresters, submitted statement...............    95
    Submitted questions..............................................   372

      HEARING TO REVIEW THE IMPACT OF THE INDIRECT LAND USE AND RENEWABLE

               BIOMASS PROVISIONS IN THE RENEWABLE FUEL STANDARD

                                  ----------

                             WEDNESDAY, MAY 6, 2009

                      House of Representatives,
     Subcommittee on Conservation, Credit, Energy, and
                                              Research,
                                      Committee on Agriculture,
                                                       Washington, D.C.
        The Subcommittee met, pursuant to call, at 11:10 a.m., in
    Room 1300 of the Longworth House Office Building, Hon. Tim
    Holden [Chairman of the Subcommittee] presiding.
        Members present: Representatives Holden, Herseth Sandlin,
    Halvorson, Dahlkemper, Markey, Schauer, Kissell, Boccieri,
    Massa, Bright, Kratovil, Minnick, Peterson (ex officio),
    Goodlatte, Moran, King, Schmidt, Smith, Latta, Luetkemeyer,
    Thompson, Cassidy, and Pomeroy.
        Staff present: Nona Darrell, Adam Durand, Craig Jagger,
    Tyler Jameson, Robert L. Larew, Anne Simmons, Cherie Slayton,
    Rebekah Solem, Kristin Sosanie, Patricia Barr, Brent Blevins,
    Tamara Hinton, Josh Maxwell, and Jamie Mitchell.

       OPENING STATEMENT OF HON. TIM HOLDEN, A REPRESENTATIVE IN
                       CONGRESS FROM PENNSYLVANIA

        The Chairman. This hearing of the Subcommittee on
    Conservation, Credit, Energy, and Research to review the impact
    of the indirect land use and renewable biomass provisions in
    the Renewable Fuel Standards will come to order.
        I would like to welcome our witnesses to today's hearing.
    In this hearing we hope to examine the impact of indirect land
    use and renewable biomass provisions in the Renewable Fuel
    Standard. As our economy continues to change, we will rely more
    and more on biofuels. Farmers can be at the forefront of this
    revolution by using the commodities they grow, and even the
    waste, that they now have to find ways to discard in innovative
    new ways to produce transportation fuels. Linking agriculture
    and renewable fuels is important to diversify our energy
    market, protect our environment, and revitalize rural America.
        I am pleased to be from a state that is leading efforts to
    lessen our nation's dependency on imported oil. Pennsylvania is
    at the forefront of promoting renewable energy and will
    continue to be at this helm, but only if its feedstock
    potential is eligible for use under the new Renewable Fuel
    Standard.
        One concern in the new Renewable Fuel Standard as put
    forward in the Energy Independence Act and Security Act of
    2007, is how lifecycle greenhouse gas emissions will be defined
    and regulated. The law calls for the total amount of greenhouse
    gas emissions, including direct and indirect emission sources,
    to be counted. But how do we define indirect emissions from
    land use changes. Indirect land use changes are not a case of,
    ``we know it when we see it.'' We must use models to forecast
    what may occur and have to make assumptions that may not be
    correct. How do we ensure accuracy? How far do we go? How do we
    calculate an assumed ripple effect?
        I would like to include in the record letters from a wide
    range of respected researchers, scientists, and economists and
    industry groups that oppose the supposed science behind the
    indirect land use changes and realize that they are something
    we cannot measure or quantify. And I would like the Ranking
    Member and the Chairman of the full Committee and other Members
    present just to look at the size of the comments we have
    received so far.
        [The information referred to is located on p. 98:]
        The Chairman. When the science is so uncertain requiring
    inclusion of indirect land use changes, it is really not the
    proper way to address international policy decisions on how to
    stop the clearing of the Amazon Rainforest.
        Furthermore, the definition of renewable biomass contained
    in H.R. 6 is problematic because it could exclude a majority of
    the country's woody biomass. The definition would exclude much
    forestland because it was not clear cut and then replanted.
    Hardwood forestland in my home State of Pennsylvania, and much
    of the Northeast, as well as several other regions of the
    country, could be an important component in meeting the new
    Renewable Fuel Standard, but would be excluded by this
    definition.
        Pennsylvania also has hundreds of thousands of acres of
    abandoned mine lands. These lands can be restored and planted
    with conserving grasses such as switchgrass, which could be
    used for cellulosic biofuel. Being able to use the abandoned
    mine land for growing feedstocks would create an economic
    incentive to restore the desolate landscape which now relies on
    inadequate Federal and state funds. But, under the new
    Renewable Fuel Standard the statute requires land to have been
    previously cultivated.
        If we continue with these provisions in H.R. 6, we will
    shortchange a large part of the country before we even get
    started. It is the statute which was not created through
    regular order that is a problem, and it needs to be changed to
    allow for a greater flexibility. We need to expand the reach of
    biofuels, not hamper the farmer and forest owner. We need to
    increase biofuels production, not restrict our energy
    independence.
        I am extremely interested in hearing what our witnesses say
    today. I hope we can then move forward to ensure agriculture's
    continued role in producing renewable fuels and reducing
    America's dependence on imported oil.
        I thank our witnesses for being here today.
        I now recognize the Ranking Member of the Subcommittee, the
    gentleman from Virginia, Mr. Goodlatte.

     OPENING STATEMENT OF HON. BOB GOODLATTE, A REPRESENTATIVE IN
                         CONGRESS FROM VIRGINIA

        Mr. Goodlatte. Well, thank you, Mr. Chairman, and you will
    find from my remarks that we are in considerable agreement
    about the state of affairs. I very much appreciate you holding
    his hearing today to review the impact of the indirect land use
    and renewable biomass provisions in the Renewable Fuel
    Standard.
        The Energy Independence and Security Act of 2007,
    dramatically increased the RFS to 36 billion gallons by 2022.
    The expanded RFS also created an unrealistic mandate for
    conventional corn ethanol by prohibiting the use of feedstock
    from new crop acres. This restriction will make it difficult,
    if not impossible, for producers to meet the food and fiber
    demands of our consumers, while also meeting the mandate set in
    the RFS.
        We also face a major problem in the transition from grain-
    based fuels to cellulosic biofuels because the Act restricts
    the cellulosic feedstocks from forests and agriculture lands
    that can be used to meet the RFS. Virginia has been in the
    business of agriculture for over 400 years. Much of the
    uncropped land in the 6th District has the potential to grow
    switchgrass and help meet the demands of cellulosic ethanol, if
    and when it becomes commercially available. However, the
    unnecessary land restrictions in the RFS will limit potential
    biomass to be used to meet the mandate.
        The Act also discourages the production of cellulosic fuels
    from forests, one of the largest potential sources of
    cellulosic feedstock. The renewable biomass definition in EISA
    limits my home State of Virginia to 2 million acres of eligible
    forestland to meet the RFS compared to 15 million acres if we
    use the biomass definition in the 2008 Farm Bill.
        The use of forest biomass for biofuels creates markets for
    byproducts of forest improvement projects. This can help solve
    our nation's energy, forest health, and wildfire problems and
    also help forest owners stay on the land. I am supportive of
    the development of renewable fuels, but more importantly, I am
    in favor of developing a policy that is technology-neutral and
    allows the market to develop new sources of renewable energy.
        It has been over 2 years since the passage of the 2007
    Energy Bill. Yesterday the EPA released the long-awaited
    proposed regulations for the expanded RFS. I wish I had had
    more time to review the 600 pages before today's hearing,
    however, I look forward to reviewing EPA's proposal, as I am
    sure many people are curious on how they determine their model
    for lifecycle greenhouse gas emissions and how indirect land
    change was involved.
        I would also like to welcome all our witnesses for their
    testimony today. I am particularly pleased to welcome Ms.
    Anitra Webster, a tree farmer from Lynchburg, Virginia, with
    more than 20 years of experience in the field of forestry. Ms.
    Webster is a constituent of mine who brings a unique point of
    view to today's hearing as someone who owns a family tree farm.
    Ms. Webster understands the implications of the current
    definition of biomass in the Renewable Fuel Standard, and I
    look forward to hearing her testimony.
        Mr. Chairman, thank you very much.
        The Chairman. The chair thanks the gentleman and recognizes
    the Chairman of the full Committee, Mr. Peterson.

    OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
                       IN CONGRESS FROM MINNESOTA

        Mr. Peterson. Thank you, Mr. Chairman. I thank the Ranking
    Member for your leadership. I have a statement I would like
    made part of the record, but I just have to say that we have
    been going back and forth on this stuff since this energy bill
    passed. I no longer have any confidence--and I shouldn't be
    going after you folks--that you people have any idea what is
    going on here. You are going to kill off the biofuels industry
    before it ever gets started, and you are in bed with the oil
    companies. You know, why would you put indirect costs on corn
    and soybeans and not put it on oil? What about all the indirect
    costs of protecting the oil shipping lanes in the Middle East?
    You know, that is not counted.
        I mean, this is ridiculous what is going on here. You know,
    this stuff gets put in in the middle of the night, and over our
    objections. We have been trying to fix this for 2 years. I go
    down and meet with people. Nothing happens. We are off on some
    peer review. Why aren't we peer reviewing all these other
    things? Why are we picked out? Because people don't like corn
    ethanol.
        Well, I will tell you something. You kill off corn ethanol,
    which is what you are going to do here, and what I am upset
    about is not so much what we are talking about today but the
    interaction of this with the climate change bill and what is
    going on over there. I am at the point where I don't even want
    to ask anybody any questions, because you are putting us into a
    position to talk about something we shouldn't even be talking
    about.
        So I just want this message to be sent back down the Hill
    or down the street, that the way this thing is going on I am
    off the train. I will not support any kind of climate change
    bill. I don't care. Even if you fix this, because I don't trust
    anybody anymore. Okay? And I have had it.
        Thank you, Mr. Chairman.
        [The prepared statement of Mr. Peterson follows:]

      Prepared Statement of Hon. Collin C. Peterson, a Representative in
                            Congress from Minnesota
        I thank the Chairman and the Ranking Member for their leadership on
    this issue.
        More than 2 decades ago, when I would talk about renewable fuels,
    people thought I was nuts. Now ethanol is blended into all American
    gasoline to help it burn cleaner, and renewable fuels provide an
    unparalleled opportunity to create new jobs, decrease pollution and
    revitalize rural America--as long as Congress doesn't mess it up along
    the way.
        Unfortunately, two provisions in the expanded Renewable Fuel
    Standard have the potential to do just that. That's what we're here to
    talk about today.
        In the proposed rule that the EPA released yesterday, some biofuels
    are greatly penalized by the calculations on lifecycle greenhouse gas
    emissions that take into account indirect changes in international land
    use that may not even take place. The expanded RFS requires that all
    biofuels produced from facilities built after the enactment of the EISA
    achieve a reduction in lifecycle greenhouse gas emissions. The EPA
    calculates the lifecycle emissions of each fuel, relative to the
    gasoline or diesel fuel it would replace, and includes emissions from
    all stages of fuel production. Biofuels are uniquely charged with
    emissions from indirect sources, gasoline is not.
        But the simple fact is that a great deal of uncertainty remains
    when we try to measure indirect effects. This isn't about pitting folks
    against one another. It's about making sure that in our efforts to
    increase America's energy independence, we don't do more harm than
    good. We've got some big policy decisions to make, and we've got to
    make sure we're asking the tough questions and receiving reliable
    information.
        The EPA has promised to carry out a peer review process, and I
    wonder whether or not these reviews will be looking at more than just
    the numbers. It is my hope that in addition to reviewing whether EPA is
    using the best available models, that the experts will also review
    whether the best available models are good enough to be used in making
    these very important decisions. Modeling indirect land use is an
    extremely complex exercise with much room for error. And when several
    different models, from different groups of economists, are put
    together, errors can be compounded.
        Our economic experts must be asked to weigh in on whether they have
    confidence that the results coming out of these models are reasonable
    representations of real-world impacts. It's been said many times in the
    course of this discussion that regulations need to be based on sound
    science, so let's not forget that economics is a science as well, and
    ensure that economists' concerns over accuracy and proper use of their
    work are not pushed aside.
        The second provision of concern to those in American agriculture is
    the definition of renewable biomass. The definition excludes the
    cellulosic or woody biomass available in a majority of the country and
    includes stipulations that the land must be either ``actively managed''
    or ``fallowed'', in addition to being ``non-forested'' for cropland. If
    we continue with this definition, Congress would be shortchanging a
    huge part of the country before we even get started, and hamper our
    efforts to meet the goals the President has laid out.
        On both issues, we need to know more as we move forward and we need
    to make sure that we are not going to create new problems for renewable
    fuels as we continue on the road to a cleaner environment and energy
    independence.
        I thank the Chairman for calling today's hearing and look forward
    to hearing the witnesses' testimony.

        The Chairman. The chair thanks the Chairman for his
    remarks, and there is not much to say to follow up on that
    other than there are a lot of people off the train. They need a
    new conductor here, so we need to negotiate, and we have a lot
    of problems.
        Mr. Peterson. Mr. Chairman, I don't think we can negotiate.
        The Chairman. I didn't even mean that, sir.
        Mr. Peterson. Because the people we are dealing with here,
    I don't think we can negotiate with. You know, I don't have any
    confidence. I mean, the only way I would consider supporting
    any kind of climate change bill, if it was ironclad that these
    agencies had no ability to do any rulemaking of any kind
    whatsoever. We had everything dotted and crossed, the T's
    crossed, and we could be absolutely guaranteed that these folks
    would not get involved. And I am not sure if that is possible,
    but if that could be done and if they could make me confident,
    then maybe we could talk about it. But, I am not in any mood
    for negotiating with anybody at this point.
        The Chairman. Thank you, Mr. Chairman. I thought I was off
    the train first. The Chairman requests that other Members
    submit their opening statements for the record.
        [The prepared statements of Ms. Herseth Sandlin and Mr.
    Smith follow:]

    Prepared Statement of Hon. Stephanie Herseth Sandlin, a Representative
                         in Congress from South Dakota
        Thank you Mr. Chairman for your leadership on these issues. Mr.
    Glauber and Ms. Oge, welcome.
        If you look at my State of South Dakota from end-to-end, whether it
    is our vast fields of corn and soybeans in the eastern part of the
    state, the abundant wind resources across the state, or the great
    forests of the Black Hills in the West, South Dakota embodies the idea
    that we need a diversified approach to our national energy policy--and
    in particular we need to take advantage of new opportunities for
    renewable energy.
        So, as we strive to meet our national energy needs, we must
    continue to recognize that rural America, including my State of South
    Dakota, has much to offer. Rural states should be at the center of the
    solution as our national energy policy shifts and adjusts in ways that
    enhance our national and economic security; that promote both
    innovation and conservation; and that ultimately will ease the strain
    on families' and business owners' budgets.
        With the passage of the original Renewable Fuel Standard in 2005
    and the aggressive increase included in last year's energy bill, we
    have already taken initial key steps in the right direction, as we seek
    to take advantage of the contribution agricultural producers in rural
    states can make to reduce our dependence on foreign oil and overall
    carbon emissions through an increase in the production of biofuels,
    wind, and other types of renewable energy.
        It's vitally important for economic development in rural states
    like South Dakota, and for achieving our nation's goal of energy
    independence, that the EPA correctly implement the Renewable Fuel
    Standard. The new Renewable Fuel Standard approved in 2007 was an
    important step in recognizing the important role that ethanol,
    biodiesel and other clean-burning, domestic biofuels will play in
    reaching these goals. While I'm still reviewing the proposed rule, it's
    clear that there are both good and bad takeaways. The rule does clearly
    show what many of us have said for quite some time--when direct
    emissions are compared to gasoline, ethanol burns far more cleanly. On
    the other hand, I have serious questions and concerns about the rule's
    findings on so-called indirect land use changes in other countries that
    some are attributing to biofuels production. I believe that on this
    issue the proposed rule is simply the beginning of the real debate.
        I will push to ensure that no speculative indirect land use changes
    are included in a final rule, and that the final rule fairly recognizes
    the innovations of U.S. agricultural producers and biofuels producers.
    This is a key issue in the implementation of the RFS because, as Ms.
    Oge notes in her written testimony, under EPA's newly proposed rule,
    indirect emissions ``comprise a significant portion of the total
    lifecycle emissions of biofuels.''
        I'd also like to touch quickly on the issue of renewable biomass.
    The EPA was required to promulgate rules for the use of renewable
    biomass under the RFS. As many of my colleagues here today know, I have
    introduced bipartisan legislation to improve the flawed definition of
    renewable biomass that was slipped into the RFS at the eleventh hour.
        In January, the Energy Information Administration projected that
    ``available quantities of cellulosic biofuels will be insufficient to
    meet the new RFS targets for cellulosic biofuels before 2022,
    triggering both waivers and a modification of applicable volumes . . .
    .''
        I believe a key to preventing this shortfall is to ensure
    cellulosic biofuels can be produced from the greatest possible
    diversity of renewable feedstocks in communities across the nation.
    This particularly affects any region of the country with significant
    tracts of forestland, including the Midwest, Northwest, Northeast and
    South.
        The RFS definition of qualifying ``renewable biomass'' is flawed
    because:

       It excludes from the mandate almost all biofuels that use
            federally sourced biomass as a feedstock, thereby discouraging
            and disincentivizing their use in biofuels production,

       It also excludes all biofuels made from privately sourced
            biomass, unless it comes from trees that are ``planted'' in a
            ``plantation'' and ``actively managed.'' This excludes a large
            percentage of woody biomass on private land from being used in
            biofuels production, and

       It inhibits sound forest management which is critical as
            forest managers work to improve the health of our forests and
            reduce the risk of catastrophic wildfire.

        I am very pleased indeed to have strong bipartisan support for this
    legislation from Members representing districts that are geographically
    diverse, including Chairman Peterson.
        Mr. Chairman, thank you again for focusing the Subcommittee on
    these issues of vital importance to South Dakota and other rural
    states.
                                     ______

     Prepared Statement of Hon. Adrian Smith, a Representative in Congress
                                 from Nebraska
        Thank you, Mr. Chairman.
        Through the Energy Independence and Security Act of 2007, Congress
    charged the Environmental Protection Agency (EPA) with evaluating the
    ``carbon footprint'' of biofuels in order to meet Renewable Fuel
    Standard (RFS) requirements set forth in this statute. Under the EPA's
    recently proposed rule, biofuels such as cellulosic ethanol, biodiesel,
    and corn-based ethanol, which would otherwise have no difficulty
    meeting these greenhouse gas reduction requirements, could be targeted
    due to the estimated impact of indirect land use changes.
        Currently, there are no widely accepted methodologies or models for
    calculating indirect land use changes resulting from increased biofuel
    production. The premature use of inaccurate or incomplete data could
    cause severe harm to the U.S. biofuels industry and potentially
    disqualify sustainable feedstock from being utilized. My home State of
    Nebraska has more than 45 million acres of farmland. It is simply not
    practical to draw broad conclusions across a large geographic region
    concerning the effects of particular land use changes on resulting
    greenhouse gas emissions. Different greenhouse gas emissions are caused
    by variations in soil, local climate, and different farming practices.
    The study of the environmental impact of agriculture operations is a
    comparatively new science, and should not undermine years of renewable
    energy research.
        Again, thank you, Mr. Chairman. I appreciate the Subcommittee
    holding this hearing and look forward to discussing and reviewing this
    proposal in a bipartisan, productive manner.

        The Chairman. I would like to call up our first panel of
    witnesses today. Dr. Joe Glauber, Chief Economist for U.S.
    Department of Agriculture, Ms. Margo Oge, Director, Office of
    Transportation and Air Quality, U.S. Environmental Protection
    Agency.
        Dr. Glauber, you may proceed when ready.

       STATEMENT OF JOSEPH GLAUBER, Ph.D., CHIEF ECONOMIST, U.S.
              DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.

        Dr. Glauber. Thanks very much, Mr. Chairman. I would like
    to thank you and the Members of the Subcommittee for the
    opportunity to discuss in the indirect land use provisions that
    are part of the Energy Security and Independence Act of 2007.
        In my written testimony I discuss how biofuel production
    affects land use in the United States and the rest of the
    world, and discuss what is meant by emissions associated with
    land use change. I present findings from various studies on
    greenhouse gas emissions from renewable fuels and discuss some
    of the key uncertainties noted in these research efforts in
    estimating the land effects of land use change on greenhouse
    gas emissions.
        Literature on biofuel production in international land use
    has developed largely over the past 5 years. Most of the focus
    has been on the effect of biofuel production in U.S.
    agriculture, however, several more recent studies attempt to
    also model the ripple effects that would occur in agricultural
    markets around the world due to increased biofuel use within
    the U.S., and the implications this might have on greenhouse
    gas emissions.
        There is little question that increased biofuel production
    has had and will have effects on land use in the U.S. and the
    rest of the world. The more interesting question concerns
    magnitude. To the degree to which the supply response to
    increased biofuel production is met through increased yields,
    cropland expansion will be less. Land use change is more likely
    to occur where producers are more responsive to price changes.
        How much pasture and forest is converted to cropland will
    ultimately depend on the region, national, and local land use
    policies, and the degree to which competing uses such as
    grazing and forest products impose constraints for expansion.
    While economic modelers have a long history of policy analysis
    in agriculture, most of the analyses have focused on the impact
    of various domestic or international trade policies, for
    example, farm bills, trade agreements, on cropland.
        By contrast, the empirical literature on land use and
    greenhouse gas emissions is relatively young, with most studies
    appearing in the last 2 to 3 years. Sensitivity analysis
    suggests wide variation in results. In particular, much is to
    be learned about land conversion from forest to pasture and
    from pasture to cropland.
        Modeling the change in land use resulting from the
    expansion and the production of cornstarch-based ethanol
    requires making projections about future values of parameters
    that obviously cannot be known with certainty. Therefore,
    judgments and assumptions must be made as to the likely values
    these uncertain data will take. Each assumption, whether made
    explicitly or implicitly in the structure and data of the
    model, will influence the outcome.
        For example, two widely respected economic models estimate
    very different land requirements with respect to expanding
    ethanol production, and some of this I go into in my written
    testimony. These differences in land requirements shape the
    greenhouse gas profile associated with ethanol. In my written
    testimony I discuss some of the major assumptions that
    influence the estimate of greenhouse gas emissions from
    cornstarch-based ethanol and other biofuels.
        Some of the more critical factors: assumption on yield
    growth. Most models assume some trend yield growth due to
    technological change, but how sensitive are yields to price
    changes? Should we expect yields to increase if prices are
    higher? Increased yields means smaller increases in total crop
    acres due to increased ethanol production.
        Responsiveness to changes in prices: If world corn and
    soybean prices increase, where are we more likely to seek
    increases in plantings? Where is cropland conversion more
    likely to take place? The greenhouse gas emissions conversion
    of forest to cropland are far larger than emissions from
    pasture to cropland.
        Substitutability of distiller dry grains: DDGs are an
    important byproduct of ethanol production. The more DDGs
    replace corn and soybean meal in feed rations, the smaller
    potential impact of ethanol production on feed prices, and
    enhanced land use change.
        And accounting for future greenhouse gas emissions:
    Generally when comparing greenhouse emissions of renewable
    fuels to non-renewable alternatives, studies assume increases
    in greenhouse gas from land use occur in the conversion, while
    reductions in greenhouse gas emissions due to the production
    and use of renewable fuels occur over several years into the
    future. Increasing the expected timeframe for renewable fuel
    production on converted lands reduces their net greenhouse gas
    emissions.
        Last, Mr. Chairman, let me say that USDA has had a
    constructive and cooperative relationship with EPA as they have
    developed their renewable fuel proposal. Their proposal raises
    challenging issues for public comment and will do much to
    advance the understanding of the lifecycle greenhouse gas
    emissions impact of biofuels, and in particular, the land use
    change impacts. USDA looks forward to continuing our
    relationship with EPA as they complete the work necessary to
    finalize the RFS rule.
        Mr. Chairman, that concludes my statement.
        [The prepared statement of Dr. Glauber follows:]

      Prepared Statement of Joseph Glauber, Ph.D., Chief Economist, U.S.
                  Department of Agriculture, Washington, D.C.
        Mr. Chairman, Members of the Subcommittee, thank you for the
    opportunity to discuss the indirect land use provisions that are part
    of the Energy Security and Independence Act of 2007 (EISA). Renewable
    fuels produced from renewable biomass feedstocks are defined in terms
    of their impact on lifecycle greenhouse gas (GHG) emissions. EISA
    further defined lifecycle GHG emissions to mean ``the aggregate
    quantity of GHG emissions (including direct emissions and significant
    indirect emissions such as significant emissions from land use
    changes), as determined by the Administrator of the EPA, related to the
    full fuel lifecycle, including all stages of fuel and feedstock
    production and distribution, from feedstock generation or extraction
    through the distribution and delivery and use of the finished fuel to
    the ultimate consumer, where the mass values for all greenhouse gases
    are adjusted to account for their relative global warming potential.''
        The feedstock limitations associated with the exclusion of some
    sources of renewable biomass as defined in EISA--particularly with
    respect to cellulosic materials from both private and public
    forestlands--may serve to limit the opportunity to replace fossil
    fuels. In the future, ethanol produced from cellulosic sources,
    including wood biomass, has the potential to cut lifecycle GHG
    emissions by up to 86 percent relative to gasoline (Wang et al. 2007).
        Yesterday, the Administrator of the Environmental Protection Agency
    (EPA) signed a notice of proposed rulemaking for the Renewable Fuel
    Standard (RFS) included in the EISA. EPA's proposal reflects
    considerable input, guidance, and data from USDA. EPA's proposal also
    utilized many of the same data and assumptions that USDA uses regularly
    in near-term forecasting agricultural product supply, demand, and
    pricing. They further acknowledge the uncertainty associated with the
    various models and input assumptions involved in their lifecycle
    modeling, present a number of different sensitivity analyses, and seek
    comment on what, if any changes should be made for the final rule.
        While the effects of biofuel production on GHG emissions are
    expected to increase land under cultivation, existing estimates of the
    magnitude due to land use conversion vary. Work such as that published
    in Science by Searchinger et al. (2008) concluded that if GHG emissions
    from indirect land use changes were taken into account, GHG emissions
    from biofuel production were potentially far larger than previously
    estimated. On April 23, 2009, the California Air Resources Board
    adopted a regulation that would implement a Low Carbon Fuel Standard
    (LCFS) for the reduction of GHG emissions from California's
    transportation fuels by ten percent by 2020. The LCFS would take into
    account the GHG emissions of indirect land use from biofuel production,
    potentially resulting in the exclusion of corn-based ethanol produced
    in the Midwest from California fuel markets.
        Today, I would like to discuss how biofuel production affects land
    use in the United States and the rest of the world, and will discuss
    what is meant by emissions associated with land use change. I will
    defer to EPA to describe the results of their most recent research, but
    will present some various other research on GHG emissions from
    renewable fuels and discuss some of the key uncertainties noted in
    these research efforts in estimating the effects of land use change on
    GHG emissions.
    Historic Trends in U.S. Agricultural Land Use and Biofuel Production
        Before getting into each of these issues, I would like to present
    some context for this discussion by presenting a brief overview of the
    historic trends in U.S. biofuel production and agricultural land use in
    the United States and the rest of the world. Figure 1 shows the growth
    in corn and other starch based ethanol in the United States since 1992
    as well as the forecasted growth in corn and other starch based ethanol
    to 2030 based on the latest long-term forecast from the Energy
    Information Administration (EIA). The chart shows that EIA forecasts
    much of the growth in corn and other starch based ethanol will occur in
    the next couple of years and then stabilize at about 15 billion gallons
    per year into the future. The EIA projection of a plateau of 15 billion
    gallons of corn and other starch based ethanol reflects the limits
    placed on the volume of non-advanced ethanol that may qualify for
    credits under the RFS in the EISA, mandated minimum levels of
    cellulosic-based ethanol under RFS, and projected improvements in the
    profitability of cellulosic-based ethanol.
        In 2008/09, corn use for ethanol production is projected to be 3.7
    billion bushels and account for about 31 percent of total corn use in
    the United States (figure 2). By 2015/16, assuming current baseline
    assumptions remain constant, corn use for ethanol is expected to exceed
    4.8 billion bushels, about 34 percent of total corn use in the United
    States. Corn production in the United States is expected to increase
    from 12.1 billion bushels in 2008 to 14.0 billion bushels in 2015, an
    increase of 15.7 percent. Corn plantings are expected to increase from
    86 million acres to 90 million acres, up 4.7 percent, while yields are
    anticipated to increase by almost ten percent, from 154 bushels per
    acre in 2008 to 169 bushels per acre in 2015.
    [GRAPHIC] [TIFF OMITTED] 51922.001

    [GRAPHIC] [TIFF OMITTED] 51922.002

        What is the potential for expansion of cropland in the United
    States? Cropland use in the United States has varied considerably over
    the past 30 years. Figure 3 shows planted acreage to the eight row
    crops (wheat, corn, barley, grain sorghum, oats, soybeans, rice and
    cotton) since 1975. Over 297 million acres were planted to these crops
    in 1981. Plantings fell off to less than 245 million acres in the late
    1980s and generally remained between 245 to 255 million acres during
    the early 1990s as land was idled. The annual Acreage Reduction
    Programs authorized by the 1981, 1985 and 1990 Farm Bills, and
    Conservation Reserve Program (CRP) starting under the 1985 Farm Bill
    contributed significantly to this acreage reduction. Planted acres to
    the eight principal crops rose to almost 261 million acres in 1996,
    however, as grain prices spiked.
        From 1996 to 2006, plantings to the eight row crops generally
    trended downward due to lower commodity prices, increased planting
    flexibility offered by the 1996 and subsequent farm bills which allowed
    producers to fallow land that had formerly been maintained in more
    permanent cultivation, and expansion of minor crops such as canola.
    With the return of higher prices in 2007, however, plantings to the
    eight row crops rose again, reaching 253 million acres last year. Based
    on producer planting intentions, NASS estimates that 246 million acres
    will be planted to the eight row crops in 2009.
    [GRAPHIC] [TIFF OMITTED] 51922.003

                 Table 1--U.S. Planted Acreage in 1996 and 2008
                                 (million acres)
    ------------------------------------------------------------------------
                                                                 Change from
                   Crop                    1996         2008       1996 to
                                                                     2008
    ------------------------------------------------------------------------
    Wheat                                     75.1         63.1        ^12.0
    Corn                                      79.2         86.0          6.8
    Other feed grains                         24.8         15.7         ^9.1
    Soybeans                                  64.2         75.7         11.5
    Rice and cotton                           17.5         12.5         ^5.0
      8 row crops                            260.8        253.0         ^7.8
    Hay\1\                                    61.2         60.1         ^1.1
    Other crops                               11.7         10.9         ^0.8
    Principal crops                          333.7        324.0         ^9.7
    CRP                                       34.5         34.5          0.0
    Principal crops plus CRP                 368.2        358.5         ^9.7
    ------------------------------------------------------------------------
    \1\ Harvested acreage.

        Table 1 compares plantings in 1996 to plantings in 2008. Even
    though acreage enrolled in the CRP was unchanged between 1996 and 2008,
    total acreage planted to the eight row crops in 2008 was down nearly 8
    million acres (about three percent) and acreage planted to principal
    crops was down almost 10 million acres from 1996 levels. Corn and
    soybean acreage were up by over 18 million acres in 2008 compared with
    1996; however, this was more than offset by declines in wheat, small
    feed grains and cotton acreage. Thus, while it is clear that producers
    planted substantially more acreage as recently as 1996, most of the
    implied capacity is likely in areas more suitable for wheat and small
    grain production.
    Estimated Land Use Effects of Biofuel Production
        The literature on biofuel production and international land use has
    developed largely over the past 5 years. Most of the focus has been on
    the effects of biofuel production on U.S. agriculture (see, for
    example, USDA, ERS/Office of the Chief Economist 2007; FAPRI 2008;
    Biomass Research and Development Board 2008; de Gorter and Just 2009).
    However, several more recent studies attempt to also model the ripple
    effects that would occur in agricultural markets around the world due
    to increased biofuel use within the U.S., and the implications this
    might have on GHG emissions. Table 2 presents the results from several
    recent modeling efforts that estimate the effects of ethanol production
    on global land use. These studies attempt to quantify the market
    response in the United States and in other countries to increases in
    commodity prices due to increases in biofuel production. These studies
    also quantify the GHG emissions from these market responses and
    attribute these emissions to biofuel production. The table is not meant
    to be comprehensive, but shows a selected range of central estimates.
    Other models, such as MIT's Emissions Prediction and Policy Analysis
    model, have also been used to examine indirect land use change impacts
    (Gurgel et al. 2007; Melillo et al. 2009). Key uncertainties are
    discussed below.
        One of the first studies of the effects of biofuels on GHG
    emissions was published by Searchinger et al., in the February 2008
    issue of Science. That study used a worldwide agricultural model to
    estimate emissions from land-use change, and reached the conclusion
    that corn-based ethanol nearly doubles greenhouse emissions over 30
    years, and increases greenhouse gases for 167 years. In contrast, when
    emissions from land use change were not included in their model, corn-
    starch based ethanol reduced GHG emissions by 20 percent compared to
    gasoline. Using the multi-market, multi-commodity international FAPRI
    (Food and Agricultural Policy Research Institute) model, Searchinger et
    al. assessed the land use change and GHG implications of increasing
    corn ethanol production in the United States by 14.8 billion gallons
    and found that an additional 26.7 million acres of land would be
    brought into crop production world-wide (1.8 million acres per billion
    gallons of ethanol). In terms of GHG emissions per unit of energy
    produced, Searchinger et al. estimated that the emissions from land use
    change alone (104 grams of CO2 equivalent per MJ of energy
    in fuel) outweighed the emissions from gasoline (92 g CO2-
    eq/MJ).
        Using the 2007 FAPRI baseline, Fabiosa et al. (2009) estimated that
    a one percent increase in U.S. ethanol use would result in a 0.009
    percent increase in world crop area. Most of the increase in world crop
    area is through an increase in world corn area. Brazil and South Africa
    respond the most, with multipliers of 0.031 and 0.042, respectively.
    Fabiosa et al. did not estimate the GHG implications of the lower land
    requirement.
        Based on the 10 year averages of U.S. ethanol use and world crop
    area taken from the 2007 FAPRI international baseline, and using the
    world area impact multiplier from Fabiosa et al. (0.009), the results
    suggest an impact multiplier of 1.64 million acres per 1 billion
    gallons of additional ethanol use, which is lower than the acreage
    effect estimated in the Searchinger study.
        The California Air Resources Board (CARB), as part of their recent
    proposed low carbon fuel standard, also estimated the GHG emissions
    associated with renewable fuels. CARB employed the Global Trade and
    Analysis Project (GTAP) model and also found significantly less land is
    required to produce ethanol than Searchinger et al. In the CARB study,
    each additional billion gallons of corn-starch based ethanol requires
    only 726,000 acres; about 60 percent less compared to Searchinger et
    al. Primarily as a result of this reduced acreage, CARB estimated the
    GHG emissions associated with land use change were 70 percent less than
    those estimated by Searchinger et al. The GHG emissions due to land use
    change were reduced from 104 grams of CO2 equivalent per MJ
    of ethanol to 30 grams of CO2 equivalent per MJ of ethanol.
        A more recent article by Tyner et al. (2009), which like the CARB
    study, employed the GTAP modeling framework, differentiated between
    various levels of ethanol production. Their results show smaller GHG
    emissions impacts from corn-starch based ethanol than the CARB study
    and \1/4\ of those estimated by Searchinger et al. Tyner et al. note
    their results are significantly less than Searchinger et al. due to
    three factors: (1) the significantly smaller change in total land use,
    (2) differences in which part of the world the change in land use
    occurs, and (3) differing assumptions regarding the percent of carbon
    stored in forest vegetation that is emitted when forest is converted
    into cropland (Searchinger et al. assumes 100 percent of carbon stored
    in forest vegetation is emitted while Tyner et al. assumes 75 percent
    of the carbon stored in forest vegetation is emitted with the remaining
    25 percent stored in long-term wood products).

                                 Table 2--Land Use Change and CO2 Emissions From Ethanol
    ----------------------------------------------------------------------------------------------------------------
                                                               Increase in    Change in     Change in        CO2
                                                                 ethanol     Global Land   Global Land   equivalent
                                                               production        Use           Use      emissions
                                                  Modeling   ------------------------------------------
                       Study                      framework                                            -------------
                                                                 Billion       Million       Million     Grams CO2-
                                                                 gallons        acres       acres per    Eq. per MJ
                                                                                            bil. gal     of Ethanol
    ----------------------------------------------------------------------------------------------------------------
    Searchinger et al. 2008 \1\                  FAPRI/CARD         14.8          26.73          1.81          104
    ----------------------------------------------------------------------------------------------------------------
    Fabiosa et al. 2009 \2\                      FAPRI/CARD          1.174         1.923         1.638         N/A
    ----------------------------------------------------------------------------------------------------------------
    California (CARB) 2009                             GTAP         13.25          9.62          0.726          30
    ----------------------------------------------------------------------------------------------------------------
    Tyner et al. 2009 \3\                              GTAP
      2001 to 2006                                                   3.085         1.8           0.576          20.8
      2006 to 7 BG                                                   2.145         1.3           0.625          22.7
      7 to 9 BG                                                      2             1.3           0.658          23.8
      9 to 11 BG                                                     2             1.4           0.689          24.9
      11 to 13 BG                                                    2             1.4           0.722          26.1
      13 to 15 BG                                                    2             1.5           0.759          27.4
      2001 to 15 BG                                                 13.23          8.77          0.663          24.0
    ----------------------------------------------------------------------------------------------------------------
    \1\ Searchinger et al. reported their results in terms of a 55.92 billion liter increase in ethanol production
      which resulted in a 10.8 million hectare change in global land use.
    \2\ Based on a ten percent increase in U.S. ethanol use using 10 year averages of U.S. ethanol use and world
      crop area taken from the 2007 FAPRI baseline. Impact multiplier of 0.009 taken from Fabiosa et al., table 2.
    \3\ Based on data from Table 7 and Table 8 and converted to MJ of ethanol by assuming each gallon of ethanol
      contains 76,330 Btu's of energy and each Btu is equal to 0.00105 megajoules (MJ).

    Sources of Uncertainty
        Modeling the change in land use resulting from the expansion in the
    production of corn-starch based ethanol, requires making projections
    about future values of parameters that cannot be known with certainty.
    Therefore, judgments and assumptions must be made as to the likely
    values these uncertain data will take. Each assumption, whether made
    explicitly or implicitly in the structure and data of the model, will
    influence the outcome. Here is a partial list of some of the major
    assumptions that influence the estimate of GHG emissions from corn-
    starch based ethanol and other biofuels.
        Yields on converted lands. Estimating the yields on converted land
    is one of the most important aspects associated with the GHG emissions
    and land use change. In the CARB analysis, a small change in the
    expected yields on converted land had a large impact on the amount of
    land necessary to meet the added demand for renewable energy and,
    therefore, on GHG emissions. When yields on converted land were
    expected to be more similar to yields on existing land, only 500,000
    acres of additional cropland were required to produce each billion
    gallons of ethanol and the emissions associated with land use change
    fell to 18.3 grams of CO2 equivalent per MJ of ethanol; a
    reduction of almost 40 percent. Alternatively, when yields on converted
    land were expected to be lower than yields on existing land, 850,000
    acres of additional cropland were required to produce each billion
    gallons of ethanol and the emissions associated with land use change
    increased to 35.3 grams of CO2 equivalent per MJ of ethanol;
    an increase of about 18 percent. Unfortunately, as discussed in the
    CARB analysis, there is little empirical evidence to guide modelers in
    selecting the appropriate value for estimating the productivity of
    converted land. There is even experience to suggest that yields on
    converted land may be higher than yields on existing land. For example,
    when Brazil began expanding soybean production from the temperate South
    into the tropical Center-West, research led to the development of a
    soybean variety that flourished in the tropics. As a result, soybean
    yields in the tropical Center-West were double that of the national
    average. On the other hand, in many other regions, existing crops are
    already on the most productive agriculture land, so yields on newly
    converted lands would be lower than on existing cropland. On net, we
    would not expect to see significantly higher yields on converted land,
    but there is little information on how yields may change when land is
    converted.
        Shifts between different land uses. Converting land from one land
    use to another can have dramatic impacts on the emissions associated
    with land use change. However, it is difficult to model the specific
    contribution of the many factors that determine land use, especially
    when changing between broad land use categories. It is one thing to try
    to estimate the movement of land allocation among different crops, such
    as switching between corn and soybeans. However, land conversion
    between land uses, such as from forest to pastureland or cropland can
    be very costly and therefore driven by longer-term economic factors.
    For example, Midwest farmers can readily move cropland between corn and
    soybeans when the relative profitability of those crops change. In
    contrast, expansion of agricultural land into other areas will depend
    on the cost of conversion of that land and land supply availability.
    For land that is currently in active use there are decisions to be made
    on long term profitability, for example for land to be converted from
    forest to cropland, long term decisions must be made regarding the
    relative profitability between agricultural and forestry commodities
    for many years into the future. Conversion of land that does not have a
    current market use (grassland or unmanaged forest) would be based on
    costs of conversion, land availability, and in addition, there are
    several non-economic factors that may significantly affect land
    conversion decisions in a particular area or country, such as national
    conservation and preservation policies and programs.
        Some studies have suggested that conversion of land into cropland
    would be associated with grassland conversion because it costs less to
    clear and prepare grassland than clearing and preparing forestland. In
    the Tyner et al. study, for example, 23 percent of the increase in
    cropland comes from conversion of managed forest. The remaining 77
    percent of the increase in cropland is a result of the conversion of
    grassland to cropland. While a majority of the land conversion is from
    grassland to cropland, a majority of the emissions due to land use
    change result from the conversion of forests to cropland, due to the
    relatively larger GHG pulse associated with forest conversion. If we
    assume there is no forest conversion and only grassland conversion, the
    emissions associated land use change estimated by Tyner et al. would
    fall by 50 percent. In many studies, estimates of forest conversion
    surfaces as a key factor driving the lifecycle GHG results. In
    addition, the GTAP modeling framework used by CARB and Tyner et al.
    includes only managed lands. This could also influencing the type of
    land conversion predicted by the model.
        Yield growth over time. Another important factor driving the amount
    of land required to produce biofuels is the growth in yields that are
    expected to occur over time. At USDA, we estimate that corn yields in
    the United States will grow at 2 bushels per acre. If we assume that
    global corn yield growth increases at the same rate as in the United
    States, by the 2015, the average corn yield in the rest of the world
    would be about ten percent higher than used in the CARB study. The
    increase in land productivity in the rest of the world would reduce the
    estimated amount of land converted into cropland in the CARB study from
    726,000 acres to 663,000 acres for each additional billion gallons of
    corn-starch based ethanol, and the average GHG emissions due to land
    use change would fall from 30 grams of CO2 equivalent per MJ
    of ethanol to 27 grams of CO2 equivalent per MJ of ethanol.
        In addition, higher commodity prices due to greater demand for
    renewable fuels would likely result in some increase in crop yields. In
    the CARB analysis, each one percent increase in the price of corn
    relative to the input costs associated with growing corn was assumed to
    increase corn yields by 0.4 percent. Varying that assumption from a 0.1
    to a 0.6 percent increase in yields for each one percent in the price
    of corn relative to inputs costs altered the estimate of GHG emissions
    due to land use change by 49 percent.
        Substitutability of Distillers Dried Grains (DDGs). DDGs are a co-
    product of corn-starch based ethanol production, and can substitute for
    corn as feed, thereby reducing the amount of corn which goes directly
    into livestock feed. Thus, the more DDGs that are assumed to be used in
    livestock feed, the fewer total cropland acres will be needed and
    therefore less GHG emissions. For example, each bushel of corn
    generates about 2.8 gallons of ethanol and almost 18 pounds of DDGS. In
    the CARB study, each pound of DDGs is assumed to displace one pound of
    corn. However, DDGs have attributes that may allow a greater than a
    one-for-one displacement of corn in animal feed. DDGs have higher
    protein and fat content compared to corn. Tyner et al. assume each
    pound of DDGs replaces 1.16 pounds of corn as animal feed. Arora et al.
    recently found that 1 pound of DDGs displaces 1.271 pounds of
    conventional feed ingredients. However, DDGs cannot completely replace
    traditional feed.
        Other Sources of Uncertainty. In addition to the uncertainties
    discussed above, many other modeling assumptions will influence the
    predicted impact of added renewable fuel production on GHG emissions,
    (e.g., the level of disaggregation in the underlying crop data,
    assumptions about international trade in agricultural commodities,
    assumptions about changes in fertilizer use, etc.). There are also
    simplifying assumptions that relate to accounting for future GHG
    emissions. Generally, when comparing the GHG emissions of renewable
    fuels to nonrenewable alternatives, studies assume that increases in
    GHG emissions from land use conversion occur in the year of conversion,
    while reductions in GHG emissions due to the production and use of
    renewable fuels occur over several years into the future. For example,
    the results from the studies referenced in this testimony assume the
    reduction in GHG emissions from expanded ethanol production occur over
    a period of 30 years. Increasing the expected time frame for renewable
    fuel production on converted land reduces their net GHG emissions,
    because the total emissions reductions associated with producing and
    using renewable fuels will be greater.
    Conclusions
        There is little question that increased biofuel production will
    have effects on land use in the United States and the rest of the
    world. The more interesting question concerns magnitude. To the degree
    to which the supply response to increased biofuel production is met
    through increased yields, cropland expansion will be less. Land use
    change is more likely to occur where producers are more responsive to
    price changes. How much pasture and forest is converted to cropland
    will ultimately depend on the region, national and local land use
    policies and the degree to which competing uses (grazing, forest
    products) impose constraints for expansion.
        While economic modelers have a long history of policy analysis in
    agriculture, most of the analyses have focused on impact of various
    domestic or international trade policies (e.g., farm bills, trade
    agreements) on cropland. By contrast, the empirical literature on land
    use and GHG emissions is relatively young, with most studies appearing
    in the last 2 or 3 years. Sensitivity analysis suggests wide variation
    in results. In particular, much is to be learned about land conversion
    from forest to pasture and from pasture to cropland.
        We have had a very constructive and cooperative relationship with
    EPA as they have developed their RFS2 proposal. Their proposal raises
    challenging issues for public comment and will do much to advance the
    scientific understanding of the lifecycle GHG emission impacts of
    biofuels, and in particular the land-use change impacts. USDA looks
    forward to continuing our relationship with EPA as they complete the
    work necessary to finalize the RFS2 rule.
        Mr. Chairman, that concludes my statement.
    References
        Arora, Salil, May Wu, and Michael Wang. ``Update of Distillers
    Grains Displacement Ratios for Corn Ethanol Life-Cycle Analysis.''
    Center for Transportation Research Energy System Division Argonne
    National Laboratory. September 2008.
        Biomass Research and Development Board. ``Increasing Feedstock
    Production for Biofuels: Economic Drivers, Environmental Implications,
    and the Role of Research.'' December 2008. Available at http://
    www.usbiomassboard.gov/pdfs/
    8_Increasing_Biofuels_Feedstock_Production.pdf.
        California Environmental Protection Agency. Air Resources Board.
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        The Chairman. Thank you, Dr. Glauber.
        Ms. Oge.

             STATEMENT OF MARGO T. OGE, DIRECTOR, OFFICE OF
     TRANSPORTATION AND AIR QUALITY, OFFICE OF AIR AND RADIATION,
         U.S. ENVIRONMENTAL PROTECTION AGENCY, WASHINGTON, D.C.

        Ms. Oge. Good morning. Thank you, Mr. Chairman and Members
    of the Subcommittee. I truly appreciate the opportunity to
    testify today about the Renewable Fuel Standard required by the
    Energy Independence and Security Act of 2007. My name is Margo
    Oge. I am the Director of the Office of Transportation and Air
    Quality. I am a career civil servant, and I am proud that I
    have been with EPA for almost 30 years, my whole career.
        I am very pleased also to share that, yesterday,
    Administrator Lisa Jackson signed a proposal to implement
    EISA's Renewable Fuel Standard, commonly called RFS2. This
    proposal is a critical step towards achieving energy
    independence, creating jobs in the United States, and reducing
    the greenhouse gas emissions that cause global warming.
        As you know, EISA requires a substantial increase in the
    volume of renewable fuels that is blended into the U.S.
    transportation fuel pool. The total volume of renewable fuel
    must reach 36 billion gallons by 2022.
        EPA estimates that the potential climate and energy
    security benefits of this program will be significant. We
    estimate that these greater volumes of biofuels will reduce
    greenhouse gas emissions from the transportation sector by
    approximately 150 to 160 million tons of CO2
    equivalent per year. That is equal to removing approximately 24
    million cars from the road. That is pretty significant.
        We also have calculated that this program when it is
    implemented will bring about $3 billion in total energy
    security benefits and could displace 15 billion gallons of
    gasoline and diesel fuel from the transportation sector.
        Finally, we estimate that the net U.S. farm income would
    increase by about $7 billion.
        Clearly a central future of this proposal is its focus on
    lifecycle greenhouse gas impact of renewable fuels. Congress
    established through EISA the first mandatory lifecycle
    greenhouse gas reduction thresholds for each of the four
    categories of renewable fuels. They must perform better when it
    comes to greenhouse gas emissions from the fuels that they are
    displacing.
        To implement these thresholds it has required EPA to look
    broadly at lifecycle analysis and to develop a methodology that
    accounts for all factors that may significantly influence this
    assessment. This includes both direct and indirect impacts,
    including indirect land use.
        Mr. Chairman and Members of the Subcommittee, we do
    recognize the potential implications of this work. To that end
    we have spent the last year and a half creating what we believe
    represents the best scientifically-supported methodology. This
    methodology uses the best tools and science available today and
    identifies both direct and indirect emissions, including those
    resulting from international land use change.
        Also, EPA has worked extensively with experts across the
    Federal Government. Clearly we have worked with Dr. Glauber and
    his colleagues at the USDA, but also we have reached out to the
    outside experts, both domestic and international stakeholders.
    The resulting methodology is an important first step in
    advancing the science behind greenhouse gas emissions from
    biofuel production and use, and meets EPA's statutory
    obligations under EISA.
        Clearly there are some, as you know, that have expressed
    concerns that the science of assessing greenhouse gas
    emissions, related especially to international land use
    changes, is very immature and subject to uncertainty; actually,
    significant uncertainty. They have suggested that EPA should
    disregard such emissions.
        There are two problems with this approach. First, it would
    be inconsistent with EISA's statutory provisions passed by
    Congress. Second, ignoring such a large contributor of
    greenhouse gas emissions would render the concept of lifecycle
    analysis, which was mandated by Congress, scientifically less
    credible.
        Mr. Chairman, the proposal that was announced yesterday is
    the beginning of a very important dialogue. We recognize that
    there are varying degrees of uncertainty in different aspects
    of the analysis, especially with indirect land use. To address
    the uncertainties surrounding the analysis, EPA is actively
    soliciting peer review comments from the scientific community,
    and also from the public at large.
        In closing, I believe EPA has put forward a proposal that
    is responsive to Congressional intent. The proposal offers an
    important opportunity for EPA to present this work and to have
    an open and transparent dialogue with all stakeholders during
    the public comment period.
        Thank you again for the opportunity to present this
    testimony. I am looking forward to answering your questions.
        [The prepared statement of Ms. Oge follows:]

    Prepared Statement of Margo T. Oge, Director, Office of Transportation
        and Air Quality, Office of Air and Radiation, U.S. Environmental
                      Protection Agency, Washington, D.C.
        Mr. Chairman and Members of the Subcommittee, I appreciate the
    opportunity to appear before you today to testify on the renewable fuel
    provisions of the Energy Independence and Security Act of 2007 (EISA).
    I am pleased to state that EPA has signed a notice of proposed
    rulemaking for the Renewable Fuel Standard included in EISA, commonly
    called RFS2. Signature of the proposed rule is an important step toward
    achieving the significant energy security and greenhouse gas (GHG)
    emission reduction benefits of this program. It also provides EPA an
    opportunity to present our work to the public and formally incorporate
    the advice and input we will receive over the coming months.
        This proposed rule would revise the current RFS program,
    established by the Energy Policy Act of 2005, and implement several
    important changes to these renewable fuel requirements. EISA requires a
    substantial increase in the volume of renewable fuel and extends the
    timeframe over which this volume grows. The total volume of renewable
    fuel must reach 36 billion gallons by 2022. Several specific volume
    targets must also be met by 2022, including 21 billion gallons of
    advanced biofuels, comprised of 16 billion gallons of cellulosic
    biofuel, 4 billion gallons of ``other'' advanced biofuels, and a
    minimum of 1 billion gallons of biomass-based diesel. We estimate that
    these greater volumes of biofuels will reduce GHG emissions from
    transportation by an average annualized emissions rate of 150-160
    million tons of CO2 equivalent per year--reductions
    estimated to be equivalent to annual emissions produced by 23 to 24
    million vehicles. EPA also has calculated that the RFS2 rule could
    bring about more than $3 billion in total energy security benefits,
    displacing an estimated 15 billion gallons of petroleum-based gasoline
    and diesel, as well as provide an expanded market for agricultural
    products and open new markets for the development of cellulosic
    feedstocks.
        A central aspect of the RFS2 program is its focus on the lifecycle
    greenhouse gas impact of renewable fuels. EISA created the first U.S.
    mandatory lifecycle greenhouse gas (GHG) reduction thresholds for
    renewable fuels used in the U.S. The statute assigns specific emission
    reduction thresholds for each of the four categories of renewable fuels
    required by the Act--requiring a percentage improvement compared to the
    baseline lifecycle emissions value for gasoline and diesel used in
    2005. EISA requires EPA to look broadly at lifecycle analyses and to
    develop a methodology that accounts for each of the important factors
    that may significantly influence this assessment, including both direct
    and indirect emissions, such as significant emissions from land use
    changes.
        EPA, working with experts from across the Federal Government,
    including experts from the Departments of Agriculture and Energy as
    well as outside experts, has spent the last year and a half creating a
    robust and scientifically supported methodology that identifies direct
    and indirect emissions, including those resulting from international
    land use change. This methodology meets our statutory obligations under
    EISA. Just as importantly, it recognizes that to account for the
    climate-related effects of renewable fuels, the direct emissions
    associated with fuel production and combustion as well as the indirect
    emissions must be taken into account. The United States is committed to
    combating climate change both at home and abroad. President Obama has
    called for a domestic cap and trade program which would reduce U.S.
    emissions by 80% by 2050. We are also actively engaged in working
    towards a successful outcome at the climate negotiations later this
    year in Copenhagen. This process will be supported by the President's
    Major Economies Forum, which seeks to inform and complement the UNFCCC
    process. The EPA proposed rule provides an important step in advancing
    the science behind measuring greenhouse gas emissions from biofuels
    production and use. Comprehensive and science-based lifecycle analysis
    provides the very foundation upon which the climate benefits of the RFS
    program are realized.
        Another reason why indirect emissions are important to identify is
    that, according to our analysis in the proposed rule, these impacts
    comprise a significant portion of the total lifecycle emissions of
    biofuels. Not including or addressing indirect emissions due to land
    use changes would ignore a large part of the greenhouse gas emissions
    associated with different fuels, and would result in a greenhouse gas
    analysis that bears little relationship to the real-world emissions
    impact of the fuels. Nevertheless, we understand that some have
    concerns that the state of the science regarding the assessment of GHG
    emissions related to international land changes is so immature, and
    potentially subject to error, that EPA should disregard or deemphasize
    such emissions, and calculate renewable fuel lifecycle GHG emissions
    assuming that there are no GHG emissions associated with predicted
    international land use changes. We believe such an approach would
    introduce far more error into lifecycle GHG assessment than the EPA
    proposal, which is based on reasoned application of the best available
    science and data. The result of disregarding land use changes would be
    to ignore the developing science in this area, and to overstate,
    perhaps dramatically, the GHG benefits of renewable fuels.
        However, we recognize that it is important to address questions
    regarding the science of measuring indirect impacts, particularly on
    the topic of uncertainty. For this reason, we have developed a
    methodology that uses the very best tools and science available,
    utilizes input from experts and stakeholders from a multitude of
    disciplines, and maximizes the transparency of our approach and our
    assumptions in the proposed rule.
        On the first point, our analysis relies on peer-reviewed models,
    including comprehensive agricultural sector models such as the Food and
    Agricultural Policy Research Institute (FAPRI) model that have been
    used widely to analyze the impacts of numerous agricultural sector
    policies including recent farm bills. We also have used the most
    current estimates of key trends in agricultural practices and fuel
    production technologies and have reviewed the growing body of
    literature on lifecycle analysis and indirect land use change.
        Our work with experts and stakeholders has involved extensive
    coordination in the development of our methodology and selection of
    inputs and models. For example, my staff met frequently with the
    Departments of Agriculture and Energy to share our analytical plan,
    request feedback on our key assumptions, and provide preliminary
    results as they became available. In many cases, we adopted the inputs
    and assumptions suggested by these Departments. For example, we have
    used Department of Agriculture models and corn yield forecasts. To
    coordinate key components of our work, we have met on a regular basis
    with other key constituents including renewable fuel producers,
    petroleum refiners and importers, agricultural associations, lifecycle
    analysis experts, environmental groups, vehicle manufacturers, states,
    gasoline and petroleum marketers, pipeline owners and fuel terminal
    operators. We also have worked closely with staff from the California
    Air Resources Board as they have been developing their low carbon fuel
    standard program.
        To maximize transparency, EPA's proposal highlights the assumptions
    and model inputs that particularly influence our assessment and seeks
    comment on these assumptions, the models we have used, and our overall
    methodology. For example, we have particularly highlighted and sought
    comment on our use of satellite imagery data to model land use changes.
    We also conducted a number of sensitivity analyses which focus on key
    parameters and demonstrate how our assessments might change under
    alternative assumptions. For example, the proposed rule presents
    results for scenarios with higher crop yields, stricter land use
    policies in other countries, and other plausible scenarios suggested by
    experts and stakeholders.
        Through this process, EPA has learned a great deal about each stage
    of the lifecycle of renewable fuels. We have learned that the time
    horizon over which emissions are analyzed and the application of a
    discount rate to value near-term versus longer-term emissions are
    critical factors in determining the ultimate GHG impact of biofuels.
    Thus our proposal highlights two options. One option assesses emissions
    impacts over a 100 year time period and discounts future emissions at
    2% annually. The second option assumes a 30 year time period for
    assessing future GHG emissions impacts and values equally all emission
    impacts, regardless of time of emission impact (i.e., uses a 0%
    discount rate). The proposed rule goes into considerable detail
    explaining the conceptual argument informing the use of a particular
    time horizon and discount rate, while also specifically seeking comment
    on this issue, and also discusses several other variations of time
    period and discount rate. We also have greatly expanded our
    understanding of renewable fuel production processes and have
    identified several technologies available today (e.g., membrane
    separation) that can significantly reduce process-related GHG
    emissions. At the same time, we have identified specific areas where
    additional information and input would be useful. For example, the
    proposed rule asks for guidance on our assumptions about future corn
    yields.
        Recognizing that lifecycle analysis is a new part of the RFS
    program and much of our methodology represents groundbreaking science,
    I have directed my staff to create multiple opportunities to solicit
    public and expert feedback on our proposed approach. In addition to the
    formal comment period on the proposed rule, EPA plans to hold a 2 day
    public workshop focused specifically on lifecycle analysis during the
    comment period to assure full understanding of the analyses conducted,
    the issues addressed, and the options that are discussed. We expect
    that this workshop will help ensure that we receive submission of the
    most thoughtful and useful comments to this proposal and that the best
    methodology and assumptions are used for calculating GHG emissions
    impacts of fuels for the final rule. Additionally, although our
    lifecycle analysis relies exclusively on peer-reviewed models and data,
    between this proposal and the final rule, we will conduct additional
    peer-reviews of key components of our analysis, including use of
    satellite data to project the type of future land use changes, methods
    to account for the variable timing of GHG emissions, and how the
    several models we have relied upon are used together to provide overall
    lifecycle GHG estimates.
        In the same way that EISA has introduced lifecycle analysis to the
    RFS program, the statute has introduced restrictions on what feedstocks
    may be used to produce renewable fuel. For example, the new law limits
    the crops and crop residues used to produce renewable fuel to those
    grown on agricultural land cleared or cultivated prior to enactment of
    EISA, that is either actively managed or fallow, and non-forested. EISA
    also requires that forest-related slash and tree thinnings used for
    renewable fuel production pursuant to the Act be harvested from non-
    Federal forestlands.
        However, the new renewable biomass provision also presents
    definitional and implementation challenges that we did not have to
    consider when designing the original RFS program. To address these
    challenges, we coordinated with and sought input from a wide range of
    stakeholders, including renewable fuel producers, private forest
    owners, and members of the agricultural and environmental communities,
    as well as with our colleagues in several USDA offices and agencies.
    Based on this extensive outreach and our own additional research, we
    have developed a proposal for public comment that we believe will
    position us to finalize and implement a practical and enforceable
    program.
        With respect to the definitional challenges, there are a number of
    terms used in the renewable biomass definition that are subject to
    interpretation and need to be clarified, such as the terms
    ``agricultural land'' and ``actively managed.'' With input from our
    colleagues at USDA and other stakeholder groups, we have proposed
    definitions for these specific terms that are meaningful in the context
    of the RFS program and that match existing industry definitions to the
    extent feasible. We also seek comment on alternative interpretations of
    these terms.
        To fully understand the implementation challenges and opportunities
    presented by the new renewable biomass definition, we held extensive
    discussions with stakeholders. We also investigated existing Federal
    reporting programs and third-party certification programs for
    agricultural and forest products, and for biofuel feedstocks, in the
    hopes of leveraging such programs to avoid redundancy for our regulated
    parties. As described in our proposal, we determined that no single
    existing program or certification system could be relied on to ensure
    compliance with the renewable biomass definition. Therefore, we
    developed our proposal, which would make renewable fuel producers
    responsible for ensuring that feedstocks used to produce renewable fuel
    for credit under the RFS program meet the definition of renewable
    biomass. We expect that renewable fuel producers will work with their
    feedstock producers and suppliers to determine whether or not their
    feedstocks are in compliance. We also seek comment on a wide variety of
    alternative implementation approaches, including establishing an EPA-
    specified chain-of-custody tracking system for feedstocks as they move
    through the supply chain, and working with industry to establish an
    industry-wide quality assurance program. Our proposed and alternative
    approaches reflect many of the suggestions we received from
    stakeholders during the drafting process.
        In closing, I believe EPA has put forward a proposal that is
    responsive to Congressional intent and fulfills the economic, energy,
    and environmental goals of the RFS program. We have developed the most
    comprehensive, current and scientifically supported approach undertaken
    to date to assess the lifecycle GHG impacts of renewable fuels. We look
    forward to continuing the dialogue on our approach through the public
    comment process on the proposal and through peer review of the specific
    items I have mentioned. Likewise, I believe our proposed approach for
    interpreting and implementing the EISA definition of renewable biomass
    successfully balances practicality with enforceability to meet the
    intent of Congress in promoting environmentally sound feedstock
    production for renewable fuels. The proposed rule offers an important
    opportunity for EPA to present this work and incorporate the input we
    receive over the coming months.
        In the end, I am confident that we will be able to finalize a RFS2
    rule that will achieve the benefits envisioned by Congress--to reduce
    our dependence on foreign sources of crude oil, diversify our energy
    portfolio, and provide important reductions in greenhouse gas
    emissions.

        The Chairman. Thank you, Ms. Oge.
        Following up on Ranking Member Goodlatte's comments in his
    opening statement, it is unfortunate we did not have more time
    to review your proposal, which was almost 600 pages of notice
    of proposed rule making and 822 pages of regulatory impact
    analysis. I don't believe, and I believe the Ranking Member
    agrees with me, that that is sufficient time for comments.
        So we are going to be sending a letter down to the
    Administrator asking her to extend that comment period by 120
    days to make it a total of 180 days, and I would encourage
    Members of the Subcommittee and all our colleagues in the
    Congress to consider signing onto that.
        Mr. Goodlatte. Mr. Chairman, let me be the first.
        The Chairman. Dr. Glauber, you mentioned in your comments
    that you work closely together on this proposal. Could you be
    more specific how much time was spent, what details, how far
    down into the weeds did you get?
        Dr. Glauber. No. Thanks very much, and I think that shortly
    after passage of the Act and as EPA put a working group
    together several Federal agencies were brought in, including
    USDA, DOE, and others, to help in sort of an advisory capacity
    on various aspects of this. And so EPA solicited input on
    technical aspects of work that had been going on within USDA,
    both in terms of our economic modeling, and also in terms of
    issues like the extensive work we have been doing on distiller
    dried grains. We have provided comments to EPA, and what they
    have typically done is briefed us in terms of where they are in
    development of the rule, and we have given comments.
        Obviously they are using data of ours, but they are the
    ones who are running the models, and they are the ones who are
    putting these things together and with their own cooperators.
    They have been sharing a lot of the results with us, and we
    have responded to those results with questions.
        The Chairman. Well, how confident are you in moving forward
    with the inclusion of indirect emissions, given the current
    science that is available?
        Dr. Glauber. Well, as I pointed out in my testimony, there
    is a great deal of uncertainty. There is no question about--let
    me back up and just say that is true. We do a 10 year baseline
    every year. We have economic models that project what the corn
    price will be over the next 10 years. There is uncertainty
    related to that. On top of those models we are putting
    international land use models that, frankly, I personally have
    a lot less experience with, but all that literature was
    developed over the last few years, and so that is very new, a
    view that is very uncertain. I know there is work, and on the
    next panel there are people who have done work and some
    currently looking at international land use.
        But that is where the big source of uncertainty is. You
    know, we do forecasts all the time, and people take that
    uncertainty with the forecast in one sense. The difference here
    is, of course, you are regulating on it, regulating on the
    outcomes of this modeling effort, and that is the big question.
        As the Administrator said, I think EPA is very clear on
    what they feel the Act requires them to do in terms of setting
    standards or estimating the effects of land use change to do
    estimates of greenhouse gas emissions.
        The Chairman. There are competing definitions for renewable
    biomass currently in the law; one in H.R. 6 and one in the
    recently passed farm bill and now there are various definitions
    in introduced bills and proposals. How do you think the
    competing definitions will impact on the future of biofuel
    development?
        Both of you.
        Dr. Glauber. Okay. Let me just say that we have heard
    comments earlier, and I would agree wholeheartedly. I think
    unfortunately the definition in EISA is a very, very restricted
    definition, and one, it precludes biomass from, in most cases
    from Federal lands. There are a lot of good cases for thinnings
    and other sorts of practices that we maintain on Federal lands
    that are very important. And then insofar as private lands are
    concerned, frankly most of the biomass we are talking about are
    things from tree plantations, where you plant rather than
    naturally regenerated forests and the sorts of good management
    practices that we might want to encourage in private forests.
    Congressman Goodlatte made those points very eloquently.
        The Chairman. My time has expired, but Ms. Oge, if you want
    to comment briefly.
        Ms. Oge. Clearly, Mr. Chairman, we have worked very closely
    with USDA. I would say that when we sat down to figure out how
    do we go about addressing this very challenging issue of doing
    a lifecycle analysis for all stages of biofuels, we sat down
    with USDA and Department of Energy, and we agree upon all the
    inputs that went into the models and the type of models that we
    used.
        Clearly, as I said in my testimony, both oral and written
    testimony, there is a lot of uncertainty. We are looking
    forward to the comment period that is in front of us to have
    that dialogue with the scientific community in an effort to
    narrow the gap on the uncertainties.
        As far as the various definitions, as you said, there are
    distinct differences between EISA, the farm bill, and other
    definitions that USDA is using. We have attempted to the best
    of our efforts to try to harmonize the definitions, but, again,
    we have to stay true in implementing EISA. We have to stay
    within the EISA framework, the legal framework, and that is
    what we have done.
        We have attempted to seek comments how we can better
    harmonize the EISA definitions with the farm bill, and we are
    looking forward to the comments from the public.
        The Chairman. Thank you.
        The chair recognizes the Ranking Member, Mr. Goodlatte.
        Mr. Goodlatte. Thank you, Mr. Chairman.
        Ms. Oge, Dr. Glauber's testimony talked about the
    uncertainty of modeling the change in land use, among other
    issues. The EPA uses several different models together to
    develop the greenhouse gas lifecycle analysis. This is a
    process that EPA admits has never been done before.
        I am curious as to why the proposed regulations came out
    before a peer review had been completed.
        Ms. Oge. This is the first time that formal lifecycle
    analysis has been done. So EPA, about a year and a half ago
    when EISA was passed into law, we sat down with those experts
    to understand what is the best methodology that we could use to
    meet the requirements of the statute.
        We are using peer reviewed models, and a lot of peer
    reviewed data.
        Mr. Goodlatte. Ms. Oge, once you have produced this brand
    new methodology, so that we all could see it, not just take
    your word for it that you used experts in putting together, why
    wouldn't you do that peer review process after you had it done.
    So, you would effectively be looking before you leaped, because
    you have leaped into a bold new area here that has drawn a
    pretty negative reaction on both sides of the aisle here.
        And my follow-up question to you about this is are you
    going to do a peer review process now?
        Ms. Oge. May I----
        Mr. Goodlatte. And if so, are you going to allow the public
    to comment on those peer reviews, because we are not having any
    opportunity to see what other respected scientists, which you
    may or may not have consulted. Or you may have consulted folks
    on one side of this debate and not on the other, but we are not
    getting a look into how you came upon this very novel
    methodology. We are not able to comment on the views of
    respected scientists in this area whose views we might like to
    have as we comment in this 60-day period that we have. And I
    fully agree with the Chairman that it should be extended
    dramatically, at least to 180 days so we can figure out what is
    going on here.
        Ms. Oge. To your first question, why we didn't go ahead
    with a peer review. The first thing that we had to do is to
    have a broad discussion in a pretty open and transparent way
    with all the experts in this field. The two models that we are
    using are models that Congress has used, USDA has used. They
    are the best models available to us to do the work that
    Congress has tasked us to do.
        In order to peer review the results, you have to have
    results. The results were not available to us until fall of
    last year. That was the time that we sent a package to the
    Office of Management Budget. But we did have a very transparent
    process. We were talking with USDA or the----
        Mr. Goodlatte. The question is why would you rush to
    judgment without having the benefits of other experts looking
    at your finished product?
        Ms. Oge. We didn't have a finished product. The finished
    product, sir, is available now. You cannot have a small piece
    of the model being peer reviewed. You have to look at the whole
    record.
        Mr. Goodlatte. I understand that.
        Ms. Oge. And the whole record is part of what we are
    putting out today. This is the proposal, we have 500 pages
    explaining the methodology and another 300 pages of the
    technical inputs of the model.
        Mr. Goodlatte. Well, let me move on to another question
    since my time is limited, but I will say that the process is
    very accelerated here and is not giving people an opportunity
    to see what you are doing, or to have the benefit of the well-
    established thoughts of other experts in the area.
        But let me move onto another area. You mentioned in your
    testimony that what you are hoping to accomplish with the
    Renewable Fuel Standard is to reduce the carbon emissions of 24
    million vehicles, which is obviously a respected standard. But
    it is ironic that the authors and supporters of this
    legislation tout the benefits of the RFS as a way to reduce
    greenhouse gas emissions, yet because of the feedstock
    restrictions, it will do little to help with one of the largest
    sources of emissions; wildfires.
        Have you considered that? Last year alone, 9 million acres
    of forests burned, emitting roughly 60 million tons of carbon.
    That is roughly the equivalent of 12 million vehicles for 1
    year. How could the RFS help with this problem? In implementing
    the provisions relating to greenhouse gas emissions is the EPA
    considering ways to curb these emissions?
        Ms. Oge. The 160 million metric tons of CO2
    equivalent to removing 24 million cars from the road is based
    on the 36 billion gallons of renewable fuel as mandated for
    2022. The statute does allow biomass to be used if it comes
    from areas that are posing fire hazards. So the preamble has a
    discussion, a pretty significant discussion, again, that we
    hope that we can have dialogue with the general public, how to
    best implement that provision of the statute.
        Mr. Goodlatte. Would you agree with me that it would be a
    good idea to expand the available acreage of forestland that
    could be thinned to reduce the risk of forest fires, improve
    the health of the forest, and reduce greenhouse gas emissions
    at the same time?
        Ms. Oge. Sir, I am here to tell you the steps that we have
    taken to implement the EISA laws passed by Congress. If
    Congress is interested of providing additional provisions or
    changes to that law, I would----
        Mr. Goodlatte. Well, many of us in Congress are interested
    in doing that. We wonder if you think that would be helpful.
        Ms. Oge. I cannot talk about future provisions that
    potentially Congress would like. The only thing that I can tell
    you is that we would be more than glad to provide whatever
    technical assistance that you or other Members of the
    Subcommittee are interested in this issue.
        Mr. Goodlatte. Well, thank you. We would welcome that.
        Ms. Oge. Thank you.
        The Chairman. The chair thanks the gentleman and recognizes
    the gentleman from Michigan, Mr. Schauer.
        Mr. Schauer. Thank you very much, Mr. Chairman, and thanks
    to you both. I am a new Member of this Committee and
    specifically of the Subcommittee, represent a rural district in
    southern Michigan. I have two ethanol plants, a biodiesel plant
    that is now closed. I specifically chose to be on this
    Subcommittee because of the opportunity to grow bioenergy jobs,
    particularly in my state and my district. I have one county in
    my district with an unemployment rate of over 18 percent, and
    what is happening with the auto industry. We have incredible
    promise to grow this area in our economy to not only protect
    the environment, but also support farmers and the auto
    industry.
        Just specifically asking for your advice for what message I
    can send to farmers in my district, what promise do they have
    for opportunities to grow new products that can get into the
    biomass energy stream.
        Ms. Oge. Well, first of all, I strongly believe that the
    EISA requirements provide tremendous opportunity for the
    country to stop its dependence on foreign oil and to help us
    address greenhouse gas emissions. The statute, as you probably
    know, allows for a broad grandfathering of facilities all the
    way to the 2010, which we believe is approximately 15 billion
    gallons of corn ethanol, which is the requirement under EISA.
        So regardless, at the end of the day, whatever the
    Administration is going to decide on the lifecycle and
    threshold for corn ethanol--15 billion gallons of corn ethanol,
    that is the requirement under EISA, is grandfathered under the
    proposed rule that we published yesterday.
        Clearly, the second generation of biofuels is where we
    believe you are going to have the greatest opportunity to
    reduce the carbon footprint of the transportation sector. And,
    again, the President yesterday with the Department of
    Transportation and the USDA made announcements of providing
    additional assistance across the board to the farming
    community, but especially to the second generation of biofuels.
        So we are very optimistic, and we are talking to many
    organizations that are involved in this area. We are very
    optimistic about the future of the second generation of
    biofuels.
        Mr. Schauer. If I could follow up, Mr. Chairman, and I
    wasn't here when the 2007 legislation was written. It sounds
    like there are some concerns about rules and implementation and
    draft rules that were just presented, apparently, yesterday.
        Is the Department of Agriculture in a position, given all
    of that, to meet now with farmers that are looking to grow new
    crops for the new biofuel economy? Or would that be, based on
    what I am hearing in this Subcommittee, premature? My hope is
    that the answer would be that now we can start meeting with
    those farmers, but I also want to be realistic. I am really
    looking for your help in how we can provide some hope to
    farmers that are looking for new opportunities.
        Dr. Glauber. No, absolutely, it is not premature. We should
    be meeting with them. I think part of the announcement
    yesterday, in fact, was the President was very clear that he
    wants engagement on this. USDA, of course, has several
    provisions that we are in the course of implementing now, in
    the 2008 Farm Bill, that would encourage production of
    biofuels, and so, no, absolutely. This is the time.
        Mr. Schauer. Well, you will be hearing from my office then.
        Thank you.
        The Chairman. The chair thanks the gentleman and recognizes
    the gentleman from Nebraska, Mr. Smith.
        Mr. Smith. Thank you, Mr. Chairman.
        Ms. Oge, if you could elaborate on in your modeling on the
    land use, indirect land use, can you explain why you included
    the foreign lands within that proposal?
        Ms. Oge. EISA requires that we look at all stages of the
    production all the way to the time where the consumer uses the
    fuel, look at both direct and indirect impacts and include
    significant indirect impacts specifically with land use. So we
    have to include international activities, and given the fact
    that setting aside the uncertainty with international land use,
    all this points that indirect land use is significant.
        So clearly by excluding that activity we would not be able
    to fulfill the statute as passed by Congress.
        Mr. Smith. Is there any reflection in the report that
    reflects what we have more control over than what we don't
    regarding domestic or foreign lands?
        Ms. Oge. Well, the land use lifecycle issues are new for
    biofuels. There are guidelines going back to 25, 30 years on
    how to do lifecycle analysis. So the lifecycle analysis
    includes all activities. For example, when we did lifecycle
    analysis of petroleum, which is the baseline for gasoline and
    diesel, we had to look at significant actions when you produce
    petroleum. For example, extraction. Extraction very often
    happens in countries outside of the United States.
    Distribution: So for the petroleum baseline we had to look at
    all those significant activities producing petroleum.
        So we had to do the same when it comes to addressing the
    lifecycle methodology for biofuels, and there is no question
    that we should include it. I think the issue that is in front
    of us, which EPA agrees, is the uncertainty associated
    including this significant impact that comes from international
    indirect land use.
        So the issue is not really not to include it. Without
    including this international land use you would not be able to
    fulfill the holistic approach that the statute requires us to
    look at the lifecycle.
        Mr. Smith. Thank you. I found it very interesting as I have
    reviewed further sugarcane-based biofuels compared to corn
    based, and there is a lot of rhetoric and perhaps some
    demagoguery out there that is mischaracterizing and spreading
    some misinformation. I am not saying that you are responsible
    for that, but I think that this report adds fuel to the fire,
    no pun intended, and it is a very problematic situation. And I
    would hope that the agency could set the record straight. I
    think you have probably seen some frustration up here, and I
    share that frustration in my attempt to set the record
    straight.
        So thank you, Mr. Chairman.
        The Chairman. The chair thanks the gentleman and recognizes
    the gentleman from North Carolina, Mr. Kissell.
        Mr. Kissell. Thank you, Mr. Chairman, and thank the
    witnesses for being here.
        I quickly want to say, like my colleague from Michigan, I
    am new on this Committee, and one of the reasons I requested
    this Subcommittee is North Carolina has a lot of forests and
    fields and capabilities of biomass fuel production, and I would
    want to add my voice to the list of expanding that definition.
        But also, Ms. Oge, the 500 pages that are in this report,
    for someone new to the Committee, for what purpose was that
    report written, what should we be looking for there, and why
    was it presented?
        Ms. Oge. Sir, in order to implement EISA we have to develop
    implementing regulations. So it is pretty routine that the
    agency has to look at all the elements of the EISA law that
    passed and interpret those elements and lay forward an approach
    that will allow us to implement this law.
        Clearly there are a lot of complex issues anywhere from the
    four different standards that the statute requires, various
    definitions of biomass, various definitions of land that is
    excluded and included for the purpose of EISA, and also the
    lifecycle analysis. So what we have done is to lay forward a
    set of options and analyses for the purpose of public comments.
    We have asked the public to review the work that the agency has
    done, and we have given 60 days for that review process.
        We are also planning to have a public hearing, a workshop
    to talk about the science associated with this program, and
    then after the public comment period closes, the Administrator
    would look at the comments received. Clearly, there will be
    many comments associated with this proposal that we lay
    forward, and then the Administrator working with other
    agencies, the Department of Agriculture, Department of Energy,
    will make final decisions for this regulation. And the final
    decisions will be placed, hopefully, in sufficient time so we
    can see the 2010 implementation for next year.
        So, again, the purpose of the public proposal yesterday is
    to provide comment, to provide the agency with the opportunity
    to have this public dialogue. We are starting with your
    Committee this morning, broadening to the community and all
    interested stakeholders, and then take those comments and help
    the Administrator to finalize this regulatory program.
        Mr. Kissell. Thank you, and that gives me insight to what
    the 500 pages are. Doesn't it seem somewhere, not to be overly
    cynical, was this law so complicated? Five hundred pages? It
    would seem like that would intimidate the public not to comment
    instead of inviting comment. Was it that far-ranging, that much
    new ground that we are attempting to unravel?
        Ms. Oge. Well, sir, I have been with EPA for many years,
    and I would note that a preamble of 500 to 600 pages is
    extensive. This is pretty typical of regulatory programs that
    we put in place in order to be able to explain the work that
    was done and seek comments. So in order to be transparent and
    open of the thinking that was used to put forward the science,
    we have to go forward and outline all these issues. If we don't
    do that, then we don't give the opportunity for comments.
        But we would be more than glad to have dialogue with any of
    your constituents, anybody that is interested, to talk to the
    agency and get a better sense about the proposal that was
    published yesterday. We would be more than glad to reach out to
    small business, farmers, renewable fuel producers and help them
    understand what is in this proposal so they can provide us
    meaningful comments.
        The Chairman. The chair thanks the gentleman and recognizes
    the gentleman from Ohio, Mr. Latta.
        The gentleman from Missouri.
        Mr. Luetkemeyer. Thank you, Mr. Chairman.
        Ms. Oge, a quick question for you here. We are talking
    about the impact of renewable fuels on CO2 levels.
    Have you done any studies to see--once we had biofuels in place
    and in usage now for quite some time--what is the impact at
    this point on CO2 levels with the usage of biofuels?
        Ms. Oge. The analysis that we published yesterday shows
    that 36 billion gallons of the use of renewable fuels as the
    EISA requires will have significant reductions of greenhouse
    gas emissions. So----
        Mr. Luetkemeyer. You haven't measured it, though?
        Ms. Oge. Excuse me?
        Mr. Luetkemeyer. You haven't measured it?
        Ms. Oge. The analysis is based on lifecycle approach.
        Mr. Luetkemeyer. You haven't measured. Have you measured
    it? Yes or no? We have had biofuels for a long. I have two
    biofuel, four biofuel plants in my district up and running.
        Ms. Oge. We understand very well by talking to the biofuel
    producers the type of fuel that they are using, energy they are
    using. They are using natural gas versus using coal, what the
    profile of the greenhouse gas emissions will be from those
    sources. You are asking us if we have gone to the plant and
    measured. No, we have not done that, but there is very little
    uncertainty of what the CO2 levels will be from
    those production facilities. And that is the input that we are
    using for this analysis.
        Mr. Luetkemeyer. But you haven't measured it. Is that
    correct?
        Ms. Oge. That is correct.
        Mr. Luetkemeyer. So if we haven't measured it in the past,
    how can we measure it in the future? Do we have that
    information at hand?
        Ms. Oge. Well, again, the lifecycle analysis asks us to
    look at the production of biofuels. There are a lot of studies
    that have measured. I have not personally gone out and measured
    the greenhouse gas emissions, but there are a lot of studies
    that have.
        Mr. Luetkemeyer. Yes, but do we not have a situation in
    place right now where we are using some of these things already
    so that we can take the models of existing usages of these
    things and then project it?
        Ms. Oge. Okay. Sir, we have used over 80 studies on
    lifecycle analysis available where measurements have taken
    place anywhere from the feedstocks, planting the feedstocks,
    transporting the feedstocks, producing them, to using them. In
    our own facility, in our own lab in Ann Arbor, Michigan, we
    measure the greenhouse gas emissions that comes out of cars if
    they use gasoline, if they use biofuels, or they are using
    biodiesel.
        So personally we haven't gone to every plant and measured,
    but there is enough data and clinical data----
        Mr. Luetkemeyer. So we don't know how much effect biofuels
    have on our CO2 levels at this point. Is that what
    you just said?
        Ms. Oge. No. I am not saying that. I am saying----
        Mr. Luetkemeyer. Well, yes, it is, ma'am, because you
    haven't measured it.
        Ms. Oge. No.
        Mr. Luetkemeyer. You just told me that.
        Ms. Oge. Okay. This is what I am saying.
        Mr. Luetkemeyer. What was the CO2 levels 5 years
    ago before we started using biofuels at the level we are at
    today?
        Ms. Oge. Sir, let me finish your first question. We have--
    --
        Mr. Luetkemeyer. I have a second question to ask. I am
    sorry.
        Ms. Oge. Okay. We have sufficient studies of clinical data
    of all the stages of the lifecycle analysis of renewable fuels
    to know what the impacts are. We know if you burn biofuel in a
    car, we know, we have measured it. We have measured it in our
    lab. How much greenhouse gas emissions comes out. We know from
    facilities that produce biofuels what is the CO2
    impact. So we know that.
        Five years ago there was less biofuel used. I am sorry I
    don't have the data with me but we would be glad to provide
    that information to you in what were the CO2
    reductions from the usage of biofuels 5 years ago.
        Mr. Luetkemeyer. Okay. Dr. Glauber, real quickly here. How
    has the usage of marginal land increased as a result of biofuel
    technology that has put more feedstocks into production or
    biofuels?
        Dr. Glauber. You are talking historically over, say if we
    look over the last 5 years, clearly we have more corn in
    production. I think that is----
        Mr. Luetkemeyer. No. My question is marginal ground. I know
    we have taken the good----
        Dr. Glauber. And I was building towards that answer. I am
    sorry.
        Mr. Luetkemeyer. I am sorry.
        Dr. Glauber. And what I would look at, and in my testimony
    I present total land planted in the U.S., cropland, and there
    land has gone down over time if you look at the principle crop
    acreage. Total planted area has largely gone down since about
    1996, which would suggest there, now, again, to ascribe that
    all to biofuels is inaccurate, but certainly there is a lot of
    the more marginal lands in the plains, in what I would
    characterize as a more rational rotation now. Those acres are
    not planted every year. You are fallowing more area.
        So if you look at that in terms of what has gone on, there
    has been more corn area that now goes towards ethanol
    production. That is unquestioned. Initially we saw a decrease
    in oilseed area. That has come back up, but if you look at the
    principle crop area, that has been fairly flat over the last
    few years.
        Mr. Luetkemeyer. Okay. Thank you, Mr. Chairman.
        The Chairman. The chair thanks the gentleman and recognizes
    the gentleman from North Dakota, Mr. Pomeroy.
        Mr. Pomeroy. I thank the Chairman for yielding. I have a
    number of questions, more than we can get through in 5 minutes.
    I would say that the concerns expressed by Chairman Peterson,
    as well as Ranking Member Goodlatte, reflect the thinking that
    certainly I have as one Member and shared by an awful lot of
    Members of this Committee. And I would probably note this is
    the beginning of a substantial and vigorous dialogue between
    the Committee and the agency on these matters.
        Mr. Subcommittee Chairman, I certainly applaud you for what
    has turned out to be a very timely hearing in light of
    yesterday's proposed rule.
        As I understand it, is your last name pronounced Oge?
        Ms. Oge. Oge.
        Mr. Pomeroy. Oge?
        Ms. Oge. Yes.
        Mr. Pomeroy. Not Oger. Oge. Okay. The grandfathering would
    basically contemplate much of the ethanol, corn-based ethanol,
    plants that have presently been constructed, would virtually
    include all of the plants constructed?
        Ms. Oge. Yes, sir. Based on the analysis that we have done
    and the way that we have gone about interpreting the provision
    of grandfathering under EISA, we believe that all 15 billion
    gallons of corn ethanol will be grandfathered, and this is the
    volume that is required under the EISA statute for corn-based
    ethanol.
        Mr. Pomeroy. I mean, it is terribly important, this
    investment made in good faith, not be just relegated to rusting
    hulks of steel on the prairie, that we do, indeed, accommodate
    their production.
        Ms. Oge. Yes.
        Mr. Pomeroy. Now, another type of biofuel, biodiesel, also
    has had substantial ramp up in capacity and a statutory goal of
    500, a target of 500 million gallons, yet there is no
    grandfather proposed for biodiesel plants. Why wouldn't you
    treat biomass-based diesel programs like ethanol?
        Ms. Oge. We believe that the statute is very clear on the
    grandfathering provision. It is intended for corn-based ethanol
    and not biodiesel.
        Mr. Pomeroy. Do you believe that the 500 million gallon
    statutory provision for biodiesel production could be met under
    your proposal?
        Ms. Oge. Again, in the proposal we have laid out a set of
    different scenarios to address all feedstocks, including
    biodiesel from both sources, soy and waste. There is at least
    one approach that the agency is exploring as part of this
    proposal that would allow facilities to average the use of
    waste biodiesel and soy biodiesel. And if that is the approach
    that at the end of this process the agency will finalize, then
    there is the potential of biodiesel to meet the greenhouse gas
    threshold.
        Mr. Pomeroy. This 500 million gallon is a statutory
    provision.
        Ms. Oge. Yes, it is.
        Mr. Pomeroy. And I hear you saying, well, maybe there is a
    possible way if there is a blending of different sources,
    perhaps, which would be permissible, maybe. And that is really
    not satisfactory at all in my opinion. There has been very
    considerable investment made in biodiesel production that you
    would wipe out, and this potential hypothetical maybe
    alternative is not fleshed out. What is clear is what wouldn't
    be allowed. What wouldn't be allowed is what has been
    established, so this is an extraordinarily consequential, I
    might say extraordinarily unacceptable proposed rule. It would
    have really a devastating impact to any investor in those
    plants that now have a production capacity, I am informed, of
    better than 2 billion gallons.
        Do you propose to deal with that at or, or is that just
    kind of out of your scope of review?
        Ms. Oge. We understand the issues and the concerns that you
    are raising about biodiesel. As I said earlier, there is a
    proposal that, if it gets finalized, we believe will allow the
    biodiesel market to meet the 500 million. The purpose of this
    process is to have the public dialogue and get input, and we
    appreciate your comments. We are seeking ways, again, within
    the statutory requirements of EISA with the greenhouse gas
    thresholds required and the work that we need to do to put
    forward a legally-defensible program to address the issues that
    you are raising. We are looking forward to having dialogue with
    you, the biodiesel sector, and see how we can address this very
    important issue.
        We agree and we understand the issue that you are raising.
        Mr. Pomeroy. Dr. Glauber, is USDA comfortable with the
    direction of the proposed EPA rule?
        Dr. Glauber. Again, as I have said, we have worked with EPA
    on this, providing comments. Certainly our concerns are exactly
    what you have pointed out. As far as corn-based ethanol is
    concerned, the Act covers that in the sense of the
    grandfathering would allow it to meet that potential cap of 15
    billion gallons of cornstarch-based ethanol.
        The more difficult issue is the effects on biodiesel of
    this analysis, and in particular soy-based biodiesel. I think
    it is very clear at least from the analysis that biodiesel from
    waste products, for example, or from waste grease and from
    animal products would qualify.
        And so because of that here you have a criteria laid out in
    the Act that they have to meet a 50 percent reduction in
    greenhouse gas emissions, and then through this analysis it
    falls short of that. That is where one worries about, okay, did
    you get the right number, and I think that is the thing we are
    all trying to grapple with here, is make sure we have the best
    number possible for this.
        As I pointed out, I think there is great uncertainty around
    these numbers.
        Mr. Pomeroy. I know I am out of time, Mr. Chairman. I just
    conclude that it appears as though the vigorous discussions
    ahead are not just between Congress and EPA. They are within
    EPA and other elements of the Administration, and I am happy to
    hear that there is other, vigorous input, particularly from the
    U.S. Department of Agriculture continuing on this matter.
        Dr. Glauber. And EPA to their credit has asked for our
    input several times, and we will be there every time we are
    asked.
        Mr. Pomeroy. Well, it is fine to ask, but I want more
    consideration of the input received in the final product.
        Thank you, Mr. Chairman. I yield back.
        Dr. Glauber. We will be vocal.
        The Chairman. The chair thanks the gentleman and recognizes
    the gentleman from Kansas, Mr. Moran.
        Mr. Moran. Mr. Chairman, thank you and to Mr. Goodlatte for
    hosting this hearing.
        In my stereotypical way I guess I would expect this kind of
    rule from the Environmental Protection Agency, but I am
    troubled by Dr. Glauber's response to the gentleman from North
    Dakota's response about comfortability. What I would expect
    from a Department of Agriculture is an advocacy for
    agriculture, for rural America for a bioenergy industry, and
    what I hear is we are providing information. I would think you
    would be here today on behalf of USDA or someone from USDA
    would be here raising real concerns with this proposed
    regulation, this policy.
        And while I can understand that we can have a discussion
    about the indirect land use, I do not understand why we would
    have any level of comfortability with indirect land use from
    foreign countries. I certainly don't understand why the
    Department of Agriculture would have any level of
    comfortability in regard to indirect land use applied against
    biofuels, but not against other sources of fuel in the United
    States.
        So in my stereotypical world I can understand the
    Environmental Protection Agency being here. That is not
    something that I would find unexpected, but I would hope that
    the Department of Agriculture would be an advocate for
    something that we have heard year after year from Secretaries
    of Agriculture under all Administrations about the value of
    biofuels and what it means to this country. We have heard that
    from Department of Energy officials, and I share the Chairman
    of the full Committee's sentiments that he expressed, I was
    going to say eloquently. I don't know that he was eloquent, but
    he was certainly forthright about the direction that this kind
    of regulation will have, what affect it will have upon an
    industry that is really struggling today to survive. This is
    just one more proverbial nail, and we have seen the consequence
    of what has happened with California's decision in regard to
    indirect land use, and what that means to the ability for
    Kansas ethanol industry to export ethanol to another state. We
    are now headed down a path in a way that is totally contrary to
    the goals that we have set forth, not just those of us on the
    Agriculture Committee who look out for rural America and
    profitability, opportunities for success in rural America, but
    as a Member of Congress who cares greatly about our national
    security and what effects our demand for foreign oil places
    upon our circumstances.
        And so Dr. Glauber, I would hope that with further thought
    a different answer to Mr. Pomeroy's question about the
    willingness to provide advice, let us see USDA set forward and
    be a spokesman for something that is very important in this
    country. I am today introducing legislation that is comparable,
    although not identical, to legislation that a Senator from
    South Dakota, Senator Thune, introduced, and I would encourage
    my colleagues to join me. It will restrict the ability to
    utilize indirect land use in regard to EPA's calculations. The
    bill strikes that referenced indirect land use and directs EPA
    to focus on direct lifecycle greenhouse gas emissions.
        Therefore, leveling that playing field between renewable
    fuels and regular gasoline allows individual ethanol producers
    with unique production methods to apply to the EPA for a lower
    carbon score, therefore: encouraging innovation within the
    ethanol industry to try to find out how we can produce ethanol
    in a less carbon-intensive way, a waiver process in regard to
    greenhouse gas reduction requirements similar to what we have
    in the Renewable Fuel Standard. If a state chooses to apply a
    state-level low-carbon fuel standard, this bill would require
    states to use lifecycle greenhouse gas emissions instead of the
    process of indirect land use.
        So I am not sure that was a question, but certainly I am
    raising the flag that this rule is creating tremendous
    challenges for an industry that is important, not just to
    agriculture but to the United States economy and particularly
    to our national security.
        Mr. Chairman, I would encourage my colleagues, if they are
    interested in our legislation, to join us today in sponsoring
    it, and I certainly would add my signature to your letter
    encouraging a longer period of time for public comment. And I
    thank the Chairman and yield back the balance of my time.
        The Chairman. The chair thanks the gentleman and recognizes
    the gentlewoman from Pennsylvania, Mrs. Dahlkemper.
        Mrs. Dahlkemper. Thank you, Mr. Chairman. Thank you for
    this very timely hearing.
        I would like to ask Dr. Glauber a question. If you owned a
    biodiesel or ethanol facility, what three items would cause you
    the most concern about the proposed EPA regulations?
        Dr. Glauber. Well, on the corn ethanol side the concerns I
    have had about the bill, the one concerns the certification of
    requiring that all corn comes from ag use, and EPA is
    soliciting comments in the rule on that. The last thing you
    want is a certificate for every bushel of corn that I am moving
    around the country, that it has come from an ag use. I think
    that as was mentioned, or as the Congressman raised the
    question about marginal lands, I would pretty much say that all
    this is coming from agricultural lands.
        The biodiesel thing, I think the clear thing there is
    whether or not soy-based biodiesel qualifies. Obviously if it
    doesn't qualify, that part of the industry is dealt a big blow,
    and in terms of that there may be an opportunity to mix that
    with animal waste as, again, EPA is soliciting comments on
    that. But frankly, there the issue is the pricing relative to
    animal waste, and I think that that is the big problem. And as
    we know and has been pointed out by others, biodiesel right
    now, if you are a soybean-based biodiesel producer, the margins
    are negative. They have been largely negative this year. That
    is true even, of course, with corn-based ethanol. So these are
    tough times, and to get the sort of investments necessary in
    those, they have to have some assurance that there is a future.
        Mrs. Dahlkemper. Why do you think the European Union has
    not used indirect emissions as part of their programs?
        Dr. Glauber. I am sorry?
        Mrs. Dahlkemper. Why do you think the European Union has
    not used indirect emissions as part of their programs as you
    are looking at direct and indirect?
        Dr. Glauber. Well, frankly, they have been looking at, they
    are considering looking at indirect emissions, and up until
    this point you are right. They have just been using strictly
    direct emissions, as were we. And that, of course, is the big
    difference here. If you look at biodiesel on just a direct
    emissions basis, it has a very large reduction in greenhouse
    gas emissions relative to gasoline. It is only when these
    indirect effects are put in that it doesn't meet the targets
    under EISA.
        Mrs. Dahlkemper. And what is your confidence in measuring
    indirect?
        Dr. Glauber. Well, as I said before, we have concerns about
    the overall uncertainty of this, and, again, if I look at what
    is going on in the U.S., I feel pretty confident with our
    models. The international models, I am confident, to a degree,
    but even there we know less. The real source of uncertainty, in
    my own view, is the land conversion, and it matters. It matters
    a great deal whether or not you are converting new land.
    Whether or not it is coming from other cropland, obviously
    there is very little effect there. If it is coming from
    pasture, there is some effect, but if it is forests, those are
    the big concerns. If those emissions all come from forests, you
    have a huge pulse at the beginning when you cut down those
    forests, and then you have to recoup that over a number of
    years. And that is where the real source of uncertainty in my
    view lies, because if there is an error of 20 percent, 50
    percent, or whatever, then that is where the variance really is
    in that.
        And just let me say. The last thing I want is for
    Congressman Moran to think that I was being too glib with
    Congressman Pomeroy. We are concerned, and we are working
    trying to be very constructive in this, and believe me, we are
    being advocates for the biofuel industry.
        Thank you.
        Mr. Moran. Would the gentlelady yield?
        Mrs. Dahlkemper. I yield.
        Mr. Moran. Thank you, Dr. Glauber, and I feel badly that I
    yielded back my time without giving you an opportunity to
    respond. I do appreciate your efforts, and I recognize you are
    the Department's Economist. My comments are directed broader
    than just you, sir, but I appreciate your response. Thank you.
        Thank you, ma'am.
        Mrs. Dahlkemper. I yield back my time.
        The Chairman. I thank the gentlewoman and recognize the
    gentleman from Iowa, Mr. King.
        Mr. King. Thank you, Mr. Chairman, and I thank the
    witnesses for your testimony. I have, sitting here, picked up a
    perspective, and maybe I could ask some questions and perhaps
    redirect that perspective a little bit.
        I would first ask Ms. Oge, are you familiar with Dr.
    Pimentel's study that evaluates the energy required to produce
    ethanol?
        Ms. Oge. Personally I am not familiar. The lady behind me
    is the director of the program, and she tells me that that
    analysis is reflected in the work that we have provided and was
    published yesterday.
        Mr. King. I just want to compliment her on great staff work
    to give you a little sound signal from back there.
        Ms. Oge. Well, thank you.
        Mr. King. And so Dr. Pimentel's study is reflected there,
    and then I would take that thought, and you recognize that Dr.
    Pimentel's study also includes 4,000 calories per day consumed
    by the farm worker and seven trips across the field and the
    cost of the energy that it takes to produce the tractor, the
    combine, and the equipment?
        Ms. Oge. That is part of the work I am told by my colleague
    that we are looking at now.
        Mr. King. Okay, and I am probably going to end up doing
    this second-hand, and I will perhaps submit some questions
    after the hearing to try to drill into this a little further,
    but for the record of this hearing then I will just make a
    statement on this. Dr. Pimentel's study does do those things,
    and it calculates the energy required to produce the tractor
    and the combine, the planter, the farm equipment. It calculates
    the energy consumed by the farm worker, 4,000 calories a day.
    That is more than I get, by the way. I don't work that hard,
    though. And it compares the energy use and makes a statement
    that it takes more energy to produce ethanol than you get from
    it.
        I would ask if you are familiar with the study done by Dr.
    Wong at the Argonne National Lab in Chicago that calculates the
    energy that goes into producing a gallon equivalent of BTU
    energy of ethanol versus that of gasoline?
        Ms. Oge. Yes. Sir, let me tell you a little bit what we are
    doing with the lifecycle. We are using the international
    standard organization boundaries, so we are using the same
    boundaries and the same elements----
        Mr. King. I am sorry. I am watching the clock tick, and I
    don't mean to interrupt. I really apologize for that, but out
    of the urgency then, if we are using the same boundaries, are
    you also calculating the energy that it takes to produce the
    drill rig and the pump?
        Ms. Oge. No, we are not. Let me tell you what we are doing.
    We are looking at the energy that it takes to extract oil, but
    we don't look at the energy to produce the drill extracting the
    oil. We are not looking at the energy that it takes to build a
    tractor. These are not the activities that we are including in
    the lifecycle analysis.
        Mr. King. Yes, but if Dr. Pimentel's study is incorporated
    into this what is the implication, I will ask for a broader
    answer to that.
        Ms. Oge. What I am saying is that we have looked at his
    study. I am not suggesting that we are accepting the premise
    that to do lifecycle analysis we have to look at the energy
    that goes into using a tractor.
        Mr. King. Okay. Thank you, and I will ask for a broader
    analysis of that.
        But I would ask this. Have you also looked at the amount of
    CO2 equivalent that is sequestered by an acre of
    corn versus an acre of old-growth forest?
        Ms. Oge. I believe we have.
        Mr. King. And would you have a response for this Committee
    as to----
        Ms. Oge. We would be glad to provide it when I go back to
    the office. Unfortunately, there is a lot of data, thousands
    and thousands of pages of data.
        Mr. King. Okay.
        Ms. Oge. I don't remember all of it, but I would be glad
    to----
        Mr. King. Okay.
        Ms. Oge.--give you the information.
        Mr. King. That is okay. I turn to Dr. Glauber and pose the
    question in a different fashion, and let me submit that the
    information that I have says that corn sequesters more carbon
    than an old-growth forest does. Now, you can argue what you do
    with that corn after the fact, but as I look at this ethanol
    situation that we have, and looking at the 15 billion gallon
    RFS standard we have by 2015, which the lady has testified we
    will reach with corn ethanol, and I believe we will, have you
    also calculated that with trend relying yield increases that we
    will arrive at that without using any more acres of corn?
        Dr. Glauber. Well, that is right. When we look at our
    baselines, and I believe EPA looked at or used our own analyses
    on yield growth over time, you are right. You are adding about
    2 bushels per acre per year on that, and over time that means a
    lot of acres. I think, sort of growth over say a 10 year period
    is probably equivalent to bringing in about--I am doing the
    math quickly in my head, but 4\1/2\, 5 million acres at current
    yields.
        And so over the longer run, you are absolutely right. With
    the more yield growth you are essentially being able to account
    for that increase in biofuel production.
        Mr. King. Okay, and then if I would just run some numbers
    out of my head, when I was a kid, 80 bushels of corn was a
    respectable crop. Today 240 bushels is a respectable crop.
    Monsanto put out some numbers that they project three to four
    percent increase in yields annually up to 300 bushels. Beyond
    that they don't predict. So what do we have? Triple the yields
    that we had in the last, let us say, 50 years.
        And so under this assumption I see no assumption made for
    acres consumed for cotton or non-food crops, and I hope that
    the rural population growth is factored into this as well. But
    we have about 3.2 billion bushels of corn that we have
    committed to corn ethanol, and I am looking at the language
    coming out of the CARB operation in California, it looks like
    its protectionist language to me for a state to set up
    protectionism.
        And, this presumption that has to underlie what I am
    hearing here today, and is in the report presumably and in some
    of this testimony, is that if we took those acres out of
    production that we are using to produce the 3.2 billion bushels
    of corn that will soon be up to perhaps 5 billion bushels of
    corn to reach our 15, that there would be old-growth forests
    that would be reforested in Brazil.
        I mean, isn't that the antithesis of this presumption that
    trees are being taken out in Brazil if we use corn to convert
    to ethanol? Isn't the inverse of that then you have to also
    have a presumption in your calculation that there would be
    forest growth that would regrow if we took it out of
    production?
        And I just think there are too many factors involved here,
    but I would like to hear what you have to say.
        Dr. Glauber. Well, let me just say about the carbon
    sequestration or the growth of carbon in old-growth forests. I
    don't have the numbers in front of me either, I might add, but
    you are right. Old-growth forests add very little carbon from
    year to year.
        The real issue is whether or not those forests are cut
    down, and then that is the real issue that is behind the
    analysis, that once the forests are harvested, there is a huge
    pulse of carbon by virtue of that harvest.
        But you are absolutely right in terms of it is that issue
    that really makes the difference here in terms of these
    estimates. In terms of the greenhouse gas emissions are the
    emissions on any sort of increase in land. I think that is
    behind the analysis presented in their proposal.
        Mr. King. I thank you, Dr. Glauber and Ms. Oge. I
    appreciate your testimony.
        Mr. Chairman, I appreciate the extra minute.
        The Chairman. The chair thanks the gentleman and recognizes
    the gentleman from Pennsylvania, Mr. Thompson.
        Mr. Thompson. Thank you, Mr. Chairman, Mr. Ranking Member.
    I appreciate the opportunity to have this discussion.
        I come from an energy-rich district. Actually, we drilled
    for oil the first time commercially in the world 150 years ago
    this August, but we are sitting on the third largest, world's
    largest play of natural gas, coal, ethanol plants, and timber,
    and specifically 513,000 acres, the Allegheny National Forest.
    So actually at the risk of replowing ground that was covered by
    the Ranking Member, I wanted to just follow-up, Ms. Oge, on the
    biomass definition within the RFS2 that excludes material taken
    from Federal lands specifically, and I have significant
    concerns about that. I have 513,000 acres, and we are not
    talking about standing timber. You know, there is a lot of
    timber that is just rotting on the ground that would be great
    fuel stock. And frankly, it is good fuel stock because it is
    contributing across the nation to wildfires.
        And as the Ranking Member made reference to, I mean, the
    data, the scientists are pretty clear that humans are
    contributing, I guess, four percent human activity towards
    CO2 emissions, and wildfires I have seen data that
    shows it at ten percent.
        And so the exclusion of the Federal lands, actually, really
    appears to be contributing towards the CO2 emissions
    and completely contrary. And so just briefly my question is in
    your analysis and responsibility to protect the environment,
    what is the rationale for that provision within this rule?
        Ms. Oge. Sir, again, what we are trying to do under EISA is
    to interpret the Congressional intent and do it in a way that
    would forward that regulatory proposal that is legally
    defensible. So if EISA excludes Federal land, biomass from
    Federal land, we have to respect that exclusion and interpret
    that the way that Congress intended.
        Now, I understand the issues that you are raising, but,
    again, that goes beyond the work that we have to do in
    implementing what Congress passed, the President signed to a
    law, and we have to interpret it into regulations.
        Mr. Thompson. And as it applies to this specific rule, now,
    in terms of the overall responsibility and the mission of the
    EPA. However, in terms of protecting the environment, it would
    appear to me and what would be your analysis that should have
    that been a provision within this rule in terms of accessing
    that biomass resource that is accumulating on the forest floor.
    It is contributing towards wildfires and in the end
    contributing significantly well beyond what humans contribute
    to CO2 emissions?
        Ms. Oge. On the issue of potential wildfires, we had an
    extensive discussion on that issue, and we are seeking public
    comments to what extent those areas that potentially pose risks
    from fire should be included as part of this, and we are
    looking forward for the public comments.
        Mr. Thompson. I am looking forward to weighing in on that
    conversation myself.
        Dr. Glauber, just very briefly, the USDA and the Department
    of Forest Services manages that resource with our national
    forests. It comes under that jurisdiction. Does the USDA
    support that this proposal represents the proper management and
    use of available national forests biomass resource?
        Dr. Glauber. Well, thanks. First let me just say I agree
    with what you say in terms of the implications of excluding
    Federal lands and the narrow definition on private forests. I
    think both of those miss an opportunity, both in terms of
    promoting biomass from those areas, but also encouraging better
    forest management policies.
        The problem, as Director Oge was mentioning, is the
    definition in the Act, and I think there is a question of how
    broadly can you interpret a definition that is fairly narrow
    frankly, and it is a concern. And as you know, there was a
    great debate over it during the energy bill itself, and I am
    pleased that when we did the farm bill at least that the farm
    bill did include a much broader definition.
        But the real problem is the definition in the Act itself.
        Mr. Thompson. I would agree with that.
        I yield back my time. Thank you.
        The Chairman. The chair thanks the gentleman and recognizes
    the gentlewoman from South Dakota.
        Ms. Herseth Sandlin. Thank you, Mr. Chairman, and I would
    like to say to my colleague from Pennsylvania, I enjoyed
    working with your predecessor on this issue and will look
    forward to work closely with you. The only exception I would
    take to what Dr. Glauber just said is that there wasn't a
    debate on that definition during the energy bill. That was the
    problem. It was a narrow definition stuck in the 11th hour--
    right. Controversies surrounded it in the days following and we
    have a bill that we will share with you that seeks to change
    the definition. Certainly the definition in the farm bill is
    better than what we had in the energy bill. We think the
    definition in my bill is even better, and so we will continue
    to work with Members in a bipartisan way on this Committee to
    make that change to allow both EPA and USDA to go forward as
    well as Department of the Interior with the analysis that we
    think should be done as it relates to biomass resources across
    the country.
        Ms. Oge, there have been a lot of questions on the indirect
    land use changes, and I want to focus on the domestic versus
    the international analysis. It is my understanding that
    producers asked EPA to clearly separate in its proposed rule
    the domestic and the international indirect affects attributed
    to corn ethanol and biodiesel, but in the end the rule doesn't
    provide that transparency that was requested.
        Is it correct that EPA did not break out the domestic and
    international indirect effects?
        Ms. Oge. No, it is not correct. We did provide for that
    transparency. Again, this regulatory package is extensive. I
    don't remember exactly the page that this information appears,
    but we have provided it for the purpose to be transparent,
    which we believe is very important----
        Ms. Herseth Sandlin. Well, let me----
        Ms. Oge.--the percent of greenhouse gas emissions that come
    from domestic activities versus the international land use
    impact.
        Ms. Herseth Sandlin. Okay. Well, we are still in the
    process of reviewing the lengthy proposed rule and that
    analysis. So we will keep looking for that information, and if
    you do have a page that you can point us to that clearly sets
    forth how you broke out the domestic and international
    analysis, that would be helpful.
        Ms. Oge. I would be glad to do that.
        Ms. Herseth Sandlin. Thank you. Can you also, based on the
    charts that the EPA released yesterday, we have calculations of
    emissions for grain-based ethanol over both a 100 and a 30 year
    period. Now, Dr. Glauber notes in his written testimony that
    the scientific literature on biofuels production and
    international land use has been written basically in the last 5
    years, and I would add in a very highly-politicized environment
    with a lot of misinformation circulating.
        And so if you could answer, and you may want to take these
    for the record because my time will be down here shortly, but I
    want to understand how EPA resolved some key issues relating to
    calculating land use changes. And specifically I would like to
    point to Dr. Glauber's testimony and the section entitled,
    Sources of Uncertainty so that you could provide, Ms. Oge,
    specifically how the EPA decided yields on converted lands,
    shifts between different land uses, yield growth over time, the
    substitutability of dry distiller grains, and how to treat a
    variety of modeling assumptions, including assumptions about
    changes in fertilizer use.
        So, again, many of us are concerned, and we appreciate that
    the EPA is going to subject its own analysis to peer review,
    and in the time I have remaining, if you could just take those
    for the record, if you could explain in more detail how the
    peer review process for these models is going to work.
        Ms. Oge. Yes.
        Ms. Herseth Sandlin. How will members be named, based on
    what criteria, and what timeline will it have for reaching
    conclusions, and how often do you anticipate a review of the
    models?
        Ms. Oge. I would be glad to do that. But very briefly on
    your first question, a lot of the inputs, the yield
    improvements, the acres that we expect to be used in the United
    States, and there was a question earlier, we believe very few
    new acres will be needed for the 15 billion gallons of corn
    ethanol. All this input comes from USDA for these models but we
    would be glad to respond back to you in writing.
        On the peer review there are four broad elements that we
    are seeking peer review for. One of the most important elements
    of this analysis that brings along the controversy is the use
    of satellite data for the international land use. We have used
    NASA satellite data from 2001 to 2004 timeframe that provides
    historic empirical data of how countries like Brazil have made
    decisions to move to forestland versus pastureland.
        So that is a very critical element of the analysis. So we
    will do peer review of that, along with the peer review of how
    we have put together the three models; actually, four models.
        The peer review process is the guidelines that we are
    using, EPA guidelines, Office of Management and Budget
    guidelines as how to have a third party make decisions of what
    experts that need to be brought into the peer review process.
    We hope now that the public record is in place, we have started
    the process for peer review, and we hope that the peer review
    process will be completed hopefully by the end of June. And we
    will be publishing the peer review results of that effort.
        The Chairman. The chair thanks the gentlewoman and
    recognizes the gentleman from Louisiana, Mr. Cassidy.
        Mr. Cassidy. Great thing about going last is that most of
    your questions are answered.
        That said, I do want to learn some more on this, and some
    of this you may not be able to tell me. For example, obviously
    what you decide could have tremendous impact, potentially, upon
    cap-and-trade. If you say you are taxed for the amount of
    emissions that your industry creates in the cap-and-trade
    system effectively. If it is an international issue, okay, so
    we don't have to plant more farmland, but they have to deforest
    the Amazon to produce more sugarcane or corn or whatever. Does
    that impact the tariff paid by our producers under the proposed
    cap-and-trade system? You may not know that but that comes to
    mind.
        Ms. Oge. Another office of EPA has been responsible in
    evaluating the overall cost to our domestic industry from all
    sectors for the Congressman Waxman bill, so I cannot speak to
    the methodology that they have used. But, I am pretty certain
    that the oil industry, the refiners, including the input now
    that we are getting from the renewable fuel producers, they
    will have another cap as part of the industry-wide cap-and-
    trade. To what extent the cost of that has been addressed with
    what is going to happen in the global way, I really cannot
    answer that question for you.
        Mr. Cassidy. Second, the California standards, have they
    been peer reviewed?
        Ms. Oge. We have worked very closely with the State of
    California in their efforts for their low-carbon fuel. The
    methodology that we are using in looking to the other phases of
    the lifecycle is the same methodology that they are using.
    However, they are using different economic models than we have
    used.
        I cannot answer to what extent their work has been peer
    reviewed. I do know that they had a board meeting about a week
    ago in California where the board reviewed the work that was
    done by the State of California. And my understanding is that
    they will continue looking at a number of issues that came up
    from the review process that they have undertaken for the next
    couple of years.
        Mr. Cassidy. And so I understand, obviously, fertilizer is
    part of taking increasing yields, so in your modeling if they
    use increased fertilizer, I presume that that would be included
    among your indirect costs?
        Ms. Oge. Well, the use of fertilizer is used not merely
    just for cost but as part of the greenhouse gas emissions.
        Mr. Cassidy. Yes.
        Ms. Oge. We are using what we believe is the best data
    today, but this is another component of the analysis that we
    are going to peer review in the next 60 days.
        Mr. Cassidy. I am also a freshman that never really looked
    in detail at how you report, but you mentioned that there is
    variability with things such as land use and et cetera. But I
    presume that you report with confidence intervals. Correct? A
    range of values that on a low end and a high end, depending
    upon these variables. Is that a correct assumption?
        Ms. Oge. The analysis as we have done, we are calling them
    uncertainty or sensitivity analysis so we have a number of
    scenarios, especially on elements of the analysis that have the
    most important impact for the greenhouse gas emissions, which
    is the international land use. So we have made a lot of
    sensitivity analysis.
        For example, we assume based on satellite data that about
    four percent of forests will be the land that Brazil is going
    to use. Four percent will come from forests. The remaining will
    come from pastureland, to make up for the difference of the
    corn exports that will not leave from the states and another
    country would have to make it.
        As Dr. Glauber said, that four percent, although it is very
    low, it is extraordinary crucial because that is where you get
    most of the increases of greenhouse gas emissions. So we have
    that sensitivity analysis. What if it was zero percent of
    forest? What would that land use impact be?
        So all this sensitivity analysis have been laid forward for
    public comments.
        Mr. Cassidy. Thank you very much.
        The Chairman. The chair thanks the gentleman and also would
    just like to say to our witnesses that Chairman Peterson told
    me that he was riled up, and he wanted to make a statement, and
    he certainly did that. And Ranking Member, Mr. Goodlatte and I
    have been serving on this Committee with Chairman Peterson for
    over 16 years, and he has never been shy about what has been on
    his mind. But, that is about the most direct frustration that I
    have seen in over 16 years coming out of his mouth.
        And I would just like to say that I share his frustration,
    and from the comments and questions that you received here
    today from Members on both sides of the aisle, because this is
    a very bipartisan full Committee and very bipartisan
    Subcommittee, that we are very concerned about the path that we
    are going down, and we want you to take that message back loud
    and clear.
        We thank you for your testimony.
        If the Ranking Member has something to add?
        Mr. Goodlatte. No. I would just add one thing, and that is
    in addition to the frustration about how this process has
    evolved and what has come forward, I would have to say that the
    many arbitrary restrictions in the RFS, including those that
    would allow use of planted trees or crops from land if it was
    cropped prior to passage of EISA, would seem to create an
    implementation nightmare. And if it becomes necessary to track
    what lands crops came from, or whether a tree was planted or
    naturally regenerated, and I just believe that both USDA and
    EPA are going to have an implementation problem with these
    regulations if you pursue the path that you have set yourself
    on to this point.
        So I hope, again, that you will not only listen to our
    comments but the multitude of comments I am sure you are going
    to receive from others and listen to them before you implement
    anything that is going to be Orwellian; as the process you are
    embarked upon right now in trying to determine where and how
    something was generated to create the fuels that are necessary
    for our country.
        We want to be encouraging production of all sources of
    energy in this country, not discouraging them through
    regulatory nightmares.
        Thank you, Mr. Chairman.
        The Chairman. The chair thanks our witnesses and will call
    panel two.
        Dr. Bruce A. Babcock, Director, Center for Agricultural and
    Rural Development, Iowa State University; Mr. R. Brooke
    Coleman, Executive Director of New Fuels Alliance, Boston,
    Massachusetts; Mr. Nick Bowdish, General Manager, Platinum
    Ethanol, Arthur, Iowa; Mr. Manning Feraci, Vice President of
    Federal Affairs, National Biodiesel Board; Mr. Michael Pechart,
    Deputy Secretary for Marketing and Economic Development,
    Pennsylvania Department of Agriculture; and Ms. Anitra Webster,
    family forest owner on behalf of American Forest Foundation,
    Lynchburg, Virginia.
        Dr. Babcock, when everyone is seated, you may begin your
    testimony.

           STATEMENT OF BRUCE A. BABCOCK, Ph.D., PROFESSOR OF
       ECONOMICS AND DIRECTOR, CENTER FOR AGRICULTURAL AND RURAL
              DEVELOPMENT, IOWA STATE UNIVERSITY, AMES, IA

        Dr. Babcock. Thank you, Mr. Chairman, Mr. Goodlatte, for
    the opportunity to participate in today's hearing.
        During the last 18 months my research center has worked
    with EPA to enhance their ability to determine if biofuels meet
    the greenhouse gas performance thresholds of the new RFS. EPA
    needs to estimate how diversion of corn and vegetable oil to
    fuel, biofuels will change agricultural production around the
    world. Thus, EPA naturally sought out researchers who could
    help them answer this question, since they had little expertise
    in this area.
        Diversion of corn from feed to fuel increases the price of
    corn. One response to this price increase is that more corn
    will be produced. In the United States increased corn comes
    primarily from a reallocation of land away from other crops. In
    addition, some land that was not previously landed for corn has
    been brought into production.
        Other countries will also alter their crop mix, and the
    cultivation of new land will also increase, and this
    cultivation of new land does release CO2 from the
    stock of carbon in the soil and on the plant biomass. This
    release of CO2 in response to higher corn prices is
    logically attributable to expansion of the U.S. corn ethanol
    production.
        Thus, Congress and the California legislature have some
    justification for wanting to account for the CO2
    emissions caused by price-induced changes in land use when
    determining whether expansion of biofuels increases or
    decreases CO2 emissions.
        The key question is whether we can accurately predict how
    U.S. biofuels policy will affect land use both here and abroad.
    Our ability to estimate changes in acreage devoted to U.S.
    crops due to price changes is reasonably good because we have
    been doing this for about 30 years. Our ability to estimate
    changes in agricultural production overseas is less precise.
    The reason is that there is the sheer number of agricultural
    sectors around the world that need to be well understood and
    modeled.
        The ability to estimate the dynamics of agricultural land
    use is even more limited. For example, the model that
    California uses to estimate land use changes from biofuels
    predicts that about half of the expansion in cropland from corn
    ethanol in the U.S. comes from cutting down forests. The other
    half comes from conversion of pasture.
        However, over the last 3 years we have seen little evidence
    that U.S. trees are being cut down to produce ag land. Rather
    than conversion of forests and existing pasture, U.S. cropland
    has increased primarily through some reduction in CRP and
    through increased double-cropping of soybeans after wheat.
        Our ability to accurately measure how other countries will
    expand their agricultural land is limited by a lack of
    available data and a lack of knowledge about what is actually
    going on in those countries. For example, both California and
    EPA conclude that increased crop prices from biofuels'
    expansion will increase deforestation in the Amazon. This seems
    logical because increased demand for cropland is largely met by
    pasture conversion, and unless the Brazilian cattle herd
    shrinks, it would seem that the decrease in pasture would have
    to be made up somehow. Well, where is Brazil going to get more
    pasture? Well, by converting Amazon forest in savanna. Thus,
    the argument goes. Any increase in Brazilian cropland leads to
    deforestation and a loss of savanna.
        But there is scant evidence that increased production of
    crops has been the primary culprit in the loss of Amazon
    forest. Certainly cattle and pasture have both increased in the
    Amazon since 1996, but was that due to the 36 percent increase
    in Brazilian cropland or to the 30 percent increase in the
    cattle herd in Brazil?
        With help from a research center in Brazil we are only now
    beginning to sort that out. Preliminary data suggests that a
    significant portion of the increase in cropland since 1996, in
    the major crop-producing regions of Brazil, was accommodated by
    increasing the cattle stocking rates. Further analysis is
    needed before we can state with confidence how much of the
    pasture created in the Amazon was created by crop pressure
    rather than by increased herd size.
        Well, why does this matter? Well, nobody believes that
    expansion of U.S. corn ethanol is going to increase cattle herd
    in Brazil. Rather, higher crop prices will probably lead to
    some increase in cropland. If the Amazon forest was cut down to
    accommodate increased cattle numbers and increased stocking
    rates accommodate increased cropland, then the primary impact
    in Brazil of increased crop prices will be intensification of
    cattle production, not loss of savanna and Amazon forest.
        The precision with which lifecycle analysts can estimate
    greenhouse gas emissions associated with growing, transporting,
    and processing feedstock is high. The precision with which
    models can estimate CO2 emissions associated with
    price-induced land use change is low.
        If Congress and individual states want to be able to
    estimate how expanded production of biofuels changes greenhouse
    gas emissions, then significant improvements are needed in our
    understanding of the dynamics of crop and livestock production
    outside the United States. My center is investing heavily in
    improving our understanding of Brazilian agriculture to better
    enable EPA to conduct this analysis.
        I anticipate we will be replicating this effort for other
    major producing countries. Without this kind of effort it is
    impossible to conclude with any certainty the extent to which
    increased emissions from land conversion offset the decrease in
    emissions from using renewable fuel in our transportation
    sector.
        [The prepared statement of Dr. Babcock follows:]

     Prepared Statement of Bruce A. Babcock, Ph.D., Professor of Economics
    and Director, Center for Agricultural and Rural Development, Iowa State
                              University, Ames, IA
        Thank you, Mr. Chairman, for the opportunity to participate in
    today's hearing.
        My research center has worked on the economics of biofuels for the
    last 4 years. During the last 18 months, we have worked with the
    Environmental Protection Agency (EPA) to enhance their ability to
    determine if biofuels meet the greenhouse gas performance thresholds of
    the new RFS. We have a global production and trade model that has been
    used for analysis of farm and trade policies for the last 25 years. The
    model tracks the impacts of policy changes on world agriculture,
    including estimates of the change in supply and demand for agricultural
    products. Because EPA is charged with estimating the extent to which
    increased diversion of corn from feed to fuel will cause changes in
    agricultural production around the world, they naturally sought out
    researchers who could help them answer this question.
        Increased use of corn to produce ethanol causes the price of corn
    to be higher than it otherwise would be. Both U.S. and foreign
    producers will respond to this price increase. Economic theory and the
    reality of the market suggest that one response to the price increase
    will be increased production of corn. In the United States the primary
    mechanism for increasing corn production has been through a
    reallocation of land. A secondary mechanism has been to convert land
    that was not previously planted and to plant corn or some other crop on
    it. Other countries will also alter their crop mix and will use more
    land to increase production in response to higher prices. The
    conversion of grassland or forests that would not have been cultivated
    but for higher corn prices releases CO2 from the stock of
    carbon both in the soil and in the biomass. This release of
    CO2 in both the United States and around the world in
    response to higher corn prices is logically attributable to expansion
    of U.S. corn ethanol production. Thus, Congress and the California
    legislature have good justification for wanting to account for
    emissions caused by market-induced changes in land use when determining
    whether expansion of biofuels will increase or decrease global
    greenhouse gas emissions. The key question is whether we can accurately
    predict how an expansion of U.S. biofuels will affect land use both
    here and abroad.
        Our ability to estimate changes in agricultural land use in the
    U.S. due to a change in biofuels policy is reasonably good because we
    have been doing this for about 30 years. For example, another model
    called GTAP that is used to estimated land use changes from biofuels
    predicts an expansion of 250,000 acres per billion gallons of corn
    ethanol. My center's model predicts 300,000 acres per billion gallons
    of ethanol.
        Our ability to estimate land use changes overseas is less precise.
    For example, my center's estimates are currently about 700,000 acres
    per billion gallons overseas. GTAP estimates about 400,000 acres per
    billion gallons. One reason why it is more difficult to estimate
    changes in foreign land use is the sheer number of agricultural sectors
    in all countries that need to be well understood and modeled. A second
    reason is that lower quality and availability of data in other
    countries relative to U.S. data makes it more difficult to estimate how
    land use will change.
        The ability to estimate how countries would expand their
    agricultural land is quite limited. My center does not yet estimate
    land conversion from forest, but GTAP estimates that about half of the
    predicted expansion in cropland from corn ethanol in the United States
    comes from cutting down existing forests. However, over the last 3
    years, we have seen little evidence that U.S. trees are being cut down
    to produce more agricultural land despite the fact that U.S. cropland
    has expanded by 8 million acres. We have also seen no evidence that
    significant acres of pasture have been converted, other than a drop in
    Conservation Reserve Program acres in the Dakotas. Rather than
    conversion of forest, as predicted by GTAP, U.S. cropland has increased
    primarily through a reduction in CRP acres and through increased double
    cropping of soybeans after wheat.
        Our ability to accurately measure the extent of land use changes
    outside the United States is limited because of a lack of reliable data
    and a lack of knowledge about what is actually going on in other
    countries. For example, the California Air Resources Board (CARB) and
    EPA conclude that increased crop prices from biofuels expansion will
    increase deforestation in the Amazon in Brazil. This conclusion seems
    logical because increased demand for cropland in Brazil is largely met
    by converting pasture to cropland. Unless the Brazilian cattle herd
    shrinks, it would seem that the decrease in pasture would have to be
    made up somehow. Where is Brazil going to get more pasture? By
    converting Amazon forest and savanna. Thus, the argument goes, any
    increase in Brazilian cropland leads to deforestation and a loss of
    savanna.
        EPA and CARB both heavily penalize biofuels because of the presumed
    loss of the carbon stocks in forests and savannah in Brazil. The
    existing scientific literature also concludes that expansion of
    biofuels in the United States will lead to deforestation. But what
    evidence is there that increased production of crops has led to
    expansion of pasture in the Amazon? There is evidence that cattle
    numbers and pasture have both increased in the Amazon region since
    1996. But was that due to the 30 percent increase in the Brazilian
    cattle herd or due to the 36 percent increase in Brazilian cropland
    under cultivation? We are only now beginning to sort that out, and
    preliminary data suggest that a fairly large proportion of the increase
    in cropland in the major crop-producing regions of Brazil was
    accommodated by increasing cattle stocking rates. Further analysis is
    needed before we can state with confidence how much of the pasture
    created in the Amazon was created by crop pressure rather than by
    increased herd size in Brazil. Why does this matter? Nobody believes
    that U.S. biofuels policy is going to lead to increased cattle numbers
    in Brazil. Rather, increased crop prices will increase cropland. If
    Amazon forest is getting cut down to accommodate increased cattle
    numbers, and increased stocking rates accommodate increased cropland,
    then the primary impact in Brazil of increased crop prices will be
    intensification of cattle production: not loss of savanna and Amazon
    forest.
        The precision with which lifecycle analysts can estimate the
    greenhouse gas emissions that are associated with the growing,
    transporting, and processing of the feedstock is relatively high,
    although the estimates are quite sensitive to the assumptions being
    used. The precision with which models can estimate emissions associated
    with market-induced land use changes is low. If Congress and individual
    states want to be able to estimate with any degree of confidence how
    expanded production of biofuels changes greenhouse gas emissions, then
    significant improvements are needed in our understanding of the
    dynamics of crop and livestock production around the world. My center
    is investing heavily in improving our understanding of Brazilian
    agriculture to better enable the EPA to conduct its analysis. I
    anticipate that we will be replicating this effort for other major
    producing countries. Without this kind of hard labor and data-intensive
    work, it is impossible to conclude with any certainty the extent to
    which increased emissions from land conversion offset the decrease in
    emissions from using a renewable fuel in our transportation sector.

        The Chairman. Thank you, Dr. Babcock.
        Mr. Coleman.

     STATEMENT OF R. BROOKE COLEMAN, EXECUTIVE DIRECTOR, NEW FUELS
                          ALLIANCE, BOSTON, MA

        Mr. Coleman. Mr. Chairman, Members of the Subcommittee,
    thank you for the opportunity to speak today. I submitted a
    written testimony that is longer in length, and I am going to
    change from that script a little and do something that is
    either incredibly unambitious or ambitious, and that is just to
    describe to you what the difference between a direct and
    indirect effect is, because that is a critical part of moving
    forward with this debate.
        First, a little bit of framing. What are we talking about
    here? I think we have been over the fact that this was a clause
    that was in the Renewable Fuel Standard, but a lot of other
    agencies have taken the ball and run with it, and I want to
    make sure to properly frame it.
        The California Air Resources Board added indirect land use
    change to the biofuel score in California. That increased
    biofuels anywhere from 40 to 200 percent in the relative carbon
    score to other fuels that did not pay for indirect effects. If
    you want to know why the biofuels industry is concerned about
    this number, that is it.
        Just yesterday the preliminary rule was released at EPA.
    You might notice one particular thing. Corn ethanol, just
    taking one fuel out of the mix there, corn ethanol is about 60
    percent better than petroleum based on direct effects. When you
    add indirect land use change, that benefit shrinks to 16
    percent better. And so we are talking about very real changes
    that could have very real commercial implications.
        So I want to talk about direct versus indirect emissions.
    One of the things that we skipped over is what is included in a
    direct effect. Direct effect basically means well to wheels,
    cradle to grave, whatever you want. It is all of the carbon
    emissions that are emitted during the production and use of a
    fuel. So for biofuels that means that the land, the pasture
    cleared to produce corn, the fertilizer used and the gasoline
    used to cultivate the land, moving the product to the
    biorefinery, emissions at the biorefinery, moving the finished
    product to the retailer, wholesale site, and then combusting it
    in a car.
        And so if that is a robust sort of analysis of what carbon
    emissions come from production and use, what the heck is an
    indirect effect? And, proponents that have been including
    indirect effects in the carbon score of a fuel argue that these
    effects are also part of the carbon footprint of a gallon of
    fuel, and whether you are for or against indirect effects, that
    is not true. Because any time you are talking about indirect
    effects, you are talking about market-mediated, economically-
    derived, behaviorally-induced effects that are often occurring
    far in the distance somewhere else in the marketplace. It is
    basically a fancy term for ripple effects.
        And there are two examples that are perhaps over-simplistic
    but frame the difference. The first is let us say you buy a
    Prius. You go out, and what is the direct effect of buying a
    Prius? Well, you are going to use less fuel, and you are going
    to have less carbon emissions that come out of the tailpipe.
    That is the direct effect. No one is arguing over that.
        What you are also going to have is you may drive slightly
    more because it is cheaper for you to drive, you might spend
    your extra money on something else like a trip to Paris or a
    flat screen TV that emits more carbon emissions. And then it
    gets really complicated when you think to yourself, if
    everybody buys Priuses, you are going to have the price of fuel
    going down, and then everybody is going to pull their SUV out
    of their garage and drive around. Okay. The question is not
    what is the magnitude of the effect. The question is do we add
    that effect to the carbon score of a Prius. That is a public
    policy question.
        Second example that is made up here distinctly for you,
    suppose Congress comes forward and says, we resolve to offset
    our carbon emissions every time we get on a plane and go back
    to our home district. Intuitively Members of Congress are going
    to say, ``Okay. I will pay for my portion of the plane ride. If
    I am on a plane with 100 people, I am going to pay for \1/100\
    of the emissions that come out of the plane.'' Okay, that is a
    direct effect, and I think we are all okay with that being our
    rule.
        What the indirect effects would be is if you were also
    asked to pay for the person that was going to sit in your seat
    and had to take another mode of transportation to get wherever
    they are going. That is the displacement effect. So should you
    have to pay for the other guy's or woman's carbon effect on
    another plane or not? That is the indirect effect.
        Now, bringing this full circle with 50 seconds to go here,
    this is what indirect land use change is. It is not the land
    used to produce biofuel feedstock. It is the land needed to
    produce another agricultural product, say food, say in Brazil,
    because biofuel theoretically pushed that product to another
    place. So assigning a penalty to biofuels for indirect land use
    change, whether you like it not, is penalizing biofuels for the
    land expansion that occurs as a result of the cumulative impact
    of the agricultural sector.
        And so that raises obvious questions. Also whether you like
    it or not, when you say the word, indirect, you are moving the
    carbon emissions from product A to product B. There is no way
    around it, and the reason is, is because the cumulative land
    impact of the entire agricultural sector is an accumulation of
    everybody's direct effects. And so you can't have a situation
    where people pay for direct and indirect effects because then
    the sum of all the parts equals more than the whole.
        And I would encourage people to think about that from a
    cap-and-trade perspective. How do you trade someone else's
    carbon footprint? How are you accountable for it? Can you
    change it? Can you mitigate it? What type of message does a
    public policy send for someone overseas in that particular
    situation.
        So I would like to close very quickly by framing this as
    sort of a dialogue between what is becoming two extremes. On
    the extreme side, is the side that says we have to throw all
    this stuff out. It is all completely insane. That is tempting.
    I have had a couple of nights where I think the exact same
    thing.
        However, the other extreme is that we need to pretend that
    indirect effects are part of the carbon score and just add them
    on like they did in California. And that means that we are
    basically saying we are going to add soybean production in
    Brazil that might end up in food on a plate in Italy to a U.S.
    biofuel company's carbon score and then go make them compete
    with other companies. And oh, by the way, we are not going to
    do that for petroleum. That is the other extreme, and that is
    the position being espoused by a lot of environmental groups
    out there.
        So what I would like to do, and what we need to do is two
    things. One, get back to comparing apples to apples. The
    problem with the 16 percent number with EPA, is it compares
    biofuels, paying for direct and indirect effects, to petroleum
    only paying for direct. That is not the right number if that is
    the case.
        And the other thing is that indirect effects have a role to
    play. They can inform good policy. You can score fuels based on
    direct effects, turn around and say, I am going to look at the
    indirect effects for all these different fuels, so I better
    understand, for example, how much conventional biofuel we can
    use before we send ripple effects that are of concern to us
    through the marketplace. Inform public policy but don't add it
    to the carbon score.
        Thank you very much.
        [The prepared statement of Mr. Coleman follows:]

    Prepared Statement of R. Brooke Coleman, Executive Director, New Fuels
                              Alliance, Boston, MA
        Mr. Chairman and Members of the Subcommittee, thank you for the
    opportunity to submit this statement in review of the indirect land use
    provisions of the Federal Renewable Fuel Standard (RFS). My testimony
    today will focus on indirect effects.
        My name is Brooke Coleman. I am the Executive Director and founder
    of the New Fuels Alliance, a not-for-profit national advocacy group for
    the production and use of non-petroleum fuels, with a particular focus
    on biofuels. At its core, the New Fuels Alliance is a coalition of
    biofuel producers, largely advanced biofuel producers, working in
    collaboration with communities and the private sector toward increasing
    the production and use of bio-based fuels.
        I have been an advocate for biofuels for more than 10 years, first
    as the climate director for an environmental group in California called
    Bluewater Network and later as the director of several coalitions in
    support of pragmatic approaches to reducing our dependence on foreign
    oil. I have seen the pendulum swing on biofuels several times, from the
    extremes of claims about biofuels completely replacing gasoline to
    biofuels being responsible for rainforest destruction and depriving the
    world's hungry of food. There is a reasonable center on many of these
    issues, even if we don't spend a whole lot of time discussing biofuels
    in that context.
        With time limitations in mind, I would like to start by speaking
    directly to an issue that is becoming more and more controversial; that
    is, our new foray into what are called indirect carbon effects. It
    seems that we are going to have to resolve this issue as we move
    forward with biofuel policy, and so the subject of this hearing and the
    timing of it are ideal.
    Where did the issue of indirect effects originate?
        As you know, the amended Federal Renewable Fuel Standard passed in
    December 2007 requires new biofuels to be 20-60% better than gasoline
    to be eligible for the program. Late in the process, a clause was added
    to the definition of lifecycle carbon emissions, calling for the
    inclusion of indirect effects such as indirect land use change. This
    came several months before the public debate about indirect land use
    change even started, in February 2008, and before a substantive review
    of indirect effects occurred at the policy or scientific level.
        Two weeks ago, the California Air Resources Board added indirect
    land use change penalties to the carbon score of biofuels under the
    recently adopted Low Carbon Fuel Standard (LCFS)--a standard being
    considered for adoption by 11 northeastern states and the Federal
    Government via Congressman Waxman's climate change (cap and trade)
    legislation.
        Proponents of indirect land use change tend to cast their critics
    as somehow insensitive to rainforest degradation or swayed by the
    powers of the ethanol lobby. In reality, there are legitimate questions
    to be asked and answered about the unprecedented decision to start
    adding indirect carbon effects to the carbon score of any product,
    including but not limited to biofuels.
        While the assessment and discussion of indirect effects is
    complicated, my statement today focuses on the basic questions.
    What is an indirect carbon effect?
        Proponents of including indirect effects in the carbon score of a
    fuel argue that these effects are a part of the fuel's carbon
    footprint. However, whether you are for or against indirect effects,
    this is not really true. Anytime you are talking about something
    ``indirect'' in the carbon world, you are talking about a market-
    mediated, economically or behaviorally induced, carbon effect, which is
    a fancy term for ``ripple effects'' in the marketplace occurring, in
    most cases, far from the point of production or use of the product.
        Put another way, it is the change that could occur in the
    marketplace stemming from, but not as a direct result of, using a
    product. Consider the following two examples:

       Let's say you buy a more fuel efficient car; a Prius. The
            direct effect of using that car will be less fuel use and as a
            result less carbon emissions. That is the direct effect. The
            indirect effect, however, may be that you drive slightly more
            because it's cheaper to drive, and then turn around and use the
            savings to buy a flat screen TV, which emits more carbon
            emissions than a regular television when manufactured and used.
            Even more confusing, if everyone starts driving more fuel
            efficient cars, there will be less fuel demand and the price of
            fuel will drop; this will also lead to more driving. Should we
            attach these effects to the carbon score of a Prius?

       Let's say Congress passes a resolution committing to have
            its Members offset the carbon emissions from all their flights
            back to their districts. Presumably, this means that each
            Member of Congress would be charged for his or her portion of
            the emissions coming from each flight they take. You take the
            emissions from the plane and divide by the number of seats on
            the plane; that is your share. That is the direct effect. The
            indirect effect would be the carbon emissions of the person you
            pushed onto another plane because they could not sit where you
            are sitting. Should you pay for the other person's emissions or
            should he?

        Bringing the issue back to biofuels, this is what indirect land use
    change is. It is not the land used to produce biofuel feedstock, it is
    the land needed to produce another agricultural product--say, food--
    because biofuel theoretically pushed that product to another place.
    Assigning a penalty to biofuels for indirect land use change is
    penalizing biofuels for the land expansion that occurs as a result of
    the cumulative impact of the agricultural sector.
    So how do we rationalize adding an indirect carbon effect to the carbon
            score of a product?
        This is largely a public policy question. Why should U.S. biofuels
    be penalized for the land clearing activities of a food or fiber
    manufacturer in the Amazon? Here is a key point to consider: the only
    way to rationalize adding an indirect effect to the carbon score of a
    product, such as biofuel, is to look at the world through a purely
    ``additive lens.'' You have to manually--and rather arbitrarily--
    ascribe land clearing causation to a single product; in other words,
    ``biofuels entering the marketplace is causing land clearing in
    Brazil'' . . . when in fact land clearing in Brazil occurs as a result
    of not only agricultural demand, but also socioeconomic, political,
    trade, law enforcement and other variables. Biofuels is not even the
    sole source of agricultural demand, much less the cause of world
    political and socioeconomic variables.
        Interestingly, this is a presumptive underpinning of the ethos of
    indirect effects because this is how indirect effects are modeled and
    enforced. Modeling indirect land use change, or any market-mediated
    effect, requires that the modelers freeze the world economy in a single
    moment in time in order to isolate the one variable being analyzed (in
    this case, increased biofuel demand). In other words, the model used in
    California to predict indirect land use change for biofuels, for
    example, is a static model that cannot properly ascribe ``proportionate
    cause'' to the myriad of variables that actually cause land use change.
        Two weeks ago, leading investors in advanced biofuels from eight
    firms wrote a letter to the California Air Resources Board raising
    concerns about this modeling. They said:

            ``Indirect land use change'' is an outcome derived by adding a
            predetermined amount of biofuel demand to a static, preset
            economic model, which in turn projects the potential ``price
            induced'' expansion of the agricultural sector onto additional
            land. It is a useful academic exercise, but as a price model it
            cannot account for the profit margins that drive real world
            decision making. As a result, the model is likely to over
            estimate effects that in reality would be mitigated by market
            forces, or produce estimates that in many cases are simply
            wrong. For example, in prior applications of the GTAP
            methodology, the model predicted changes in land use between
            2001 and 2006 that were actually the opposite of the real-world
            changes observed over time.\1\
    ---------------------------------------------------------------------------
        \1\ In an earlier analysis of the impact of biofuels on U.S. land
    use patterns, researchers at Purdue using GTAP concluded the harvested
    area for coarse grains like corn would increase 8.3% from 2001 to 2006,
    U.S. harvested area for oilseeds like soybeans would decline 5.8%, and
    forested area would decline 1.5% during the same period. In actuality,
    coarse grain harvested area declined by 2%, oilseed area increased by
    0.5%, and forested area increased by 0.6% from 2001 to 2006.

        More than 100 leading bio-scientists also submitted a letter to
    California, calling the science nascent and the use of it in a
    regulation premature. Remember, California's assessment of these
    penalties increased the carbon score of biofuels anywhere from 40 to
    200 percent. These are game changing carbon score increases, with real
    commercial implications. And the economic models are often
    directionally wrong and controversial from a scientific perspective.
    Summary of Problems & Solutions
        There is no question that pristine land degradation is a problem in
    this and other countries. There is no question that we should be
    assessing the indirect effects of the energy choices we make. Biofuels
    could lead to more land conversion. Using electricity and natural gas
    in vehicles could lead to more coal combustion. Ongoing petroleum
    dependence could lead to all of these indirect effects, and more, given
    that the price of petroleum influences nearly every sector of the
    economy. Turning a blind eye to ripple effects is not a reasonable
    solution.
        But there is a big difference between using these assessments to
    inform public policy decisions--for example, how much conventional
    biofuel we can use before overburdening land--and pretending that: (a)
    these effects are a part of the primary carbon footprint of a given
    fuel; or, (b) that we understand them well enough to add carbon
    penalties to each gallon of biofuel used. That is where a useful
    exercise in precaution becomes misleading and polarizing.
        While considering the public policy implications of indirect
    effects, it is useful to consider the following ``big picture'' issues:

        (1) When it comes to lifecycle carbon scoring, there are really
            only direct effects, because the indirect effect of one product
            is the direct effect of another. If products pay for direct
            effects, there are no indirect effects.

        (2) If the goal of U.S. energy policy is change, how useful is it
            to arbitrarily assign the disruptive effects of an entire
            sector to only the new entrant in that sector?

        (3) Consider the economic effects of this decision. A hectare of
            land is cleared in Brazil to produce soybeans for food. Critics
            of biofuels say that this land expansion occurred because
            biofuels is causing the world agricultural footprint to expand.
            So we saddle U.S. biofuel companies with a game changing carbon
            penalty from someone else's supply chain that is completely out
            of their control from a mitigation perspective.

        (4) An indirect effect is, by definition, the application of
            someone else's direct effect to another product or fuel. Once
            we start doing that, we are breaking down the very principles
            we are espousing in cap and trade and polluter pays: that we
            are responsible for our own carbon footprint and can and should
            improve it. Do indirect effects even work in cap and trade?

        The good news is there are reasonable solutions to this complicated
    problem. I would like to propose four (4) concrete steps to address
    concerns about indirect effects:

        (1) Study them for all fuels; we need to try to understand the
            ripple effects of the energy choices we make. The outcomes can
            inform good policy. But the current framework--in which only
            biofuels are being analyzed for price-induced effects--does not
            work.

        (2) Cast a critical eye on those that insist that indirect effects
            are part of the ``lifecycle'' carbon footprint of any product.
            Even if you believe that indirect effects analysis is
            important, as we do, this is not true. By definition, enforcing
            indirect effects relies on debiting Product A for the supply
            chain of Product B.

        (3) Use the lessons of indirect effect analysis to create a better
            and more dynamic treatment of direct effects. For biofuels,
            this means incentives to use idle and marginal land, research
            into more sustainable energy crops, a regulatory mechanism that
            incents good land use behavior instead of presuming bad
            behavior, and limitations on certain types of alternative
            energy solutions. For electricity vehicles this means
            incentives to plug-in at night, when there is excess energy on
            the grid.

        (4) Aggressively promote a better biofuel gallon. Going after first
            generation biofuels with highly questionable carbon adders is
            not going to expedite the production and use of the advanced
            biofuels that will actually make land use more sustainable.
            What the advanced biofuels community needs is the following:

          (a) Maintain a stable and durable policy; discussion about
                reworking the RFS or replacing it with another program runs
                investment away from advanced biofuels. Investors cannot
                invest ahead of regulations that are constantly being
                changed.

          (b) Create open markets. Biofuels are stuck in a market box. The
                best way to open markets for advanced biofuels is to
                mandate flex-fuel vehicles this year. These vehicles need
                not run on biofuel blends, but can run on biofuel blends if
                available. This opens up the investment horizons and demand
                markets for those trying to commercialize new kinds of
                fuels.

          (c) Establish and maintain a level playing field on which to
                compete. We must get back to comparing ``apples to apples''
                when it comes to valuing different fuels in a climate or
                energy security based regulation. Ascribing indirect
                effects to only one type of fuel skews the relative value
                of biofuels compared to petroleum.

          (d) De-risk debt financing. Biofuel refineries are project
                financed. Advanced biofuel producers need Federal support
                in terms of loan guarantees and other programs that
                mitigate the inherent risk in making investments in highly
                volatile liquid fuel markets. This is a reasonable role for
                government, and one that will be transformative in the
                marketplace.

          (e) Reject divisive strategies. Biofuel strategies that attempt
                to draw lines between good and bad biofuels are not
                productive, and are not helpful to advanced biofuel
                companies. You would not promote second-generation wind and
                solar by attacking the imperfections of and putting out of
                business first generation wind and solar companies. The
                same principle is true in biofuels.

        Thank you for the opportunity to speak today. I would be happy to
    answer any questions you may have.

        The Chairman. Thank you, Mr. Coleman.
        Mr. Bowdish.

     STATEMENT OF NICK BOWDISH, GENERAL MANAGER, PLATINUM ETHANOL,
                            LLC, ARTHUR, IA

        Mr. Bowdish. Thank you, Chairman Holden, Ranking Member
    Goodlatte. My name is Nick Bowdish, General Manager at Platinum
    Ethanol. Platinum is a 110 MGY ethanol plant which began
    operations in October 2008.
        Prior to October of 2008, I worked for Ron and Diane Fagen
    at Fagen Incorporated. Fagen, Inc. is the largest design build
    construction company in the fuel ethanol industry.
        I appreciate the opportunity to speak to you today, and I
    want to touch on three things. First, in terms of the renewable
    biomass definition, my perspective is from a developer, from a
    construction company that built half the industry. There is no
    single factor more important than feedstock supply. I am not an
    expert on timber, I am not an expert on forests, but I can tell
    you that as an example in my testimony you have a map there
    that shows a geographic area and the detail, that we as
    developers go into, to determine whether a facility can have
    long-term success.
        If we are truly to expand the production of ethanol from
    the U.S. Corn Belt to other regions of the country, we need
    common sense policy in this provision. I support legislation
    introduced by Members of this Subcommittee, including H.R.
    1190, introduced by Representative Herseth Sandlin and others,
    to correct this definition.
        Second, in regards to indirect land use change. I recognize
    and support that in order to conduct a thorough lifecycle
    analysis of greenhouse gas emissions from biofuel, direct land
    use changes may be considered by EPA. However, it is inherently
    unfair and a disservice to public policy that EPA's rule
    examines both direct and indirect effects of biofuels but only
    direct effects of petroleum.
        If EPA proceeds to make extreme assumptions about the
    carbon intensity of biofuels, relying on an untested ideology
    called indirect land use change, and, remarkably, assumes there
    are no such indirect effects from fossil fuels, this selective
    enforcement will place biofuels at an unfair competitive
    disadvantage in the fuel market. EPA has not only missed the
    boat on this, they have missed the ocean-going vessel,
    literally.
        According to the National Corn Growers Association, it
    takes 40 percent less energy and land today to produce a bushel
    of corn compared to 20 years ago. I can personally witness, on
    my way driving to the airport yesterday to join you today, corn
    being planted to the inch. I am not talking about a foot. I am
    talking to the inch. Precision agriculture and genetic markers
    are redefining the efficiency of corn.
        Since 2001, U.S. ethanol producers, of which I am part of,
    have achieved a 22 percent drop in energy use. My second figure
    in the testimony I would call your attention to is Platinum
    Ethanol's BTU use per gallon for the month of March 2009. I
    would also call to your attention that EPA's recent analysis
    uses 30,000 BTUs, yet in my facility we achieve less than
    28,000, and others in the country that are just starting are
    down in the 25,000 BTUs per gallon range.
        I invite and encourage everyone of you and everyone of your
    constituents to come see Platinum Ethanol. Come understand the
    ethanol industry of today. Seek information and truth, not
    outdated statistics used by a few that get regurgitated in the
    media. I think it is patently indefensible that EPA is
    comparing the lifecycle analysis of biofuels to that of
    petroleum in 2005, since the carbon footprint of biofuels is
    only getting better, yet the carbon footprint of petroleum is
    only getting worse.
        Indeed, if the indirect greenhouse gas emissions of
    biofuels are counted towards the carbon footprint, so should
    the indirect emissions associated with petroleum. To do
    otherwise is not a comparison. It is political tampering to
    push a minority ideology. I feel strongly that if ethanol and
    gasoline both had indirect effects considered, ethanol would be
    the clear victor.
        The President's Biofuels Interagency Working Group is just
    the place for such peer review, and I am thankful the President
    has engaged other organizations to help educate EPA on this
    issue because they simply don't get it.
        The consideration of land use effects in the lifecycle
    analysis should be limited to domestic direct impacts
    associated with growing grains until these indirect effects are
    better understood.
        I encourage the Subcommittee, all Members, to follow the
    lead of Senator John Thune, and others, Representative Moran,
    who mentioned this earlier today, to limit EPA to only use
    direct effects until we fully understand this.
        The third point in my closing seconds, I think it would be
    helpful for you to hear a perspective directly from an ethanol
    producer in today's marketplace. We are dealing with two major
    challenges; the confluence of unprecedented volatility in oil,
    corn, and ethanol prices and the evaporation of credit.
    Approximately 2 billion gallons of production capacity has been
    idled and more facilities, not next year, next month, are at
    risk of being shut down because of capital constraints.
        In order to restore sustainable industry-wide
    profitability, ethanol needs to be allowed to price into the
    fuel ration just as ingredients do in a feed ration. We need
    the Federal Government to provide a remedy to the law that
    arbitrarily restricts ethanol blending in a gallon of gasoline
    to ten percent. I strongly encourage you to support the current
    petition before EPA allowing up to 15 percent ethanol in
    gasoline.
        And if I may close with a few final comments, Mr. Chairman,
    ethanol's economic benefits are real. Today's ethanol industry
    supports almost 500,000 jobs in all sectors, provides a return
    on investment of 2.5 to 1 for every dollar invested, our energy
    security benefits are real, we are only second to Canada in
    terms of providing fuel to the United States of America. If we
    were a foreign producer--we are second. We have passed
    Venezuela, we have passed Saudi Arabia, we have passed Iraq.
        As a nation we have invested in a Strategic Petroleum
    Reserve. Have Members of this Subcommittee thought about a
    strategic ethanol reserve? Ethanol does not degrade like
    gasoline and having a fuel supply readily available for our
    military would be wise. Many people underestimate the ability
    of ethanol to power our equipment, including aviation. I call
    to your attention Greg Poe and the Fagen MX-2. This aircraft
    will perform at 19 air shows this year, including Andrews Air
    Force Base, at 275 miles an hour, twisting and tumbling through
    the air, in a spectacular display of the performance of
    American-made ethanol.
        We can do this. This is completely in our hands to control,
    and ethanol is the only alternative available right now making
    a substantial contribution. I hope this Administration and this
    Congress can stay fully committed to reducing our energy
    dependence, and I and others in private business are ready to
    help.
        Thank you, Mr. Chairman.
        [The prepared statement of Mr. Bowdish follows:]

    Prepared Statement of Nick Bowdish, General Manager, Platinum Ethanol,
                                LLC, Arthur, IA
        Thank you Chairman Holden, Ranking Member Goodlatte, and Members of
    the Subcommittee. My name is Nick Bowdish and I am the General Manager
    of Platinum Ethanol in Arthur, IA. Platinum is a 110 Million Gallon per
    Year production facility that began operations in October of 2008.
    Prior to October 2008, I worked for Ron and Diane Fagen at Fagen, Inc.,
    the largest design-builder of corn-based fuel ethanol plants in the
    United States.
        I am grateful to Chairman Peterson of the House Agriculture
    Committee for this opportunity to speak to you today.
        I appreciate the opportunity to provide the perspective of today's
    evolving ethanol industry on the critical issues concerning the
    Renewable Fuel Standard (RFS) adopted as part of the Energy
    Independence and Security Act of 2007 (EISA). Today, I will focus on
    three primary areas; the implications of the narrowly crafted renewable
    biomass definition in EISA, profound concerns about the selective
    enforcement of so-called ``indirect land use changes'' against
    biofuels, and I would like to close by providing Members of the
    Subcommittee a producer's perspective on the current state of the U.S.
    ethanol industry and some steps policymakers might consider taking to
    press forward with securing America's energy supply.
    Renewable Biomass Definition
        First, I join the call with others today to encourage Congress and
    the U.S. Environmental Protection Agency (EPA) to revisit the narrow
    and restrictive definition of ``renewable biomass'' under EISA.
    Previous to my role at Platinum Ethanol, I was a business developer for
    Fagen, Inc. As my coworkers and I developed new sites for ethanol
    plants and advised clients on the feasibility of such projects, our
    primary job was to determine if the feedstock supply in the local area
    justified the plant site. Figure 1.1 below is an example of the
    detailed mapping that takes place when siting an ethanol plant. The
    shadow depicts the corn draw area in order for the given facility to
    secure sufficient feedstock.
    Figure 1.1
    [GRAPHIC] [TIFF OMITTED] 51922.004

        For long run success, an ethanol project requires access to a
    steady supply of feedstock, whether corn or biomass. As written in
    EISA, the definition of ``renewable biomass'' excludes significant
    tonnage of woody biomass and dead timber that could be harvested from
    our national forests and used to produce a low carbon, renewable, and
    cost effective biofuel.
        If we are to truly expand the production of ethanol from the U.S.
    Corn Belt to other regions of the country, we need common sense policy
    for the firms and entrepreneurs who have developed the technology to
    efficiently convert woody biomass into advanced biofuel. Like others, I
    believe a workable solution to this definition controversy can be
    found, one which guarantees that reasonable safeguards can be
    established to protect our nation's most precious and sensitive
    national forestlands, and at the same time allow for the sensible
    harvest of timber and biomass. Coincidentally, doing so can help thin a
    significant supply of dead timber that is simply dangerous fuel for
    wild fires. I support legislation introduced by Members of this
    Subcommittee, including H.R. 1190 introduced by Representative Herseth-
    Sandlin and others to correct this definition.
        Based on my experience in siting and helping complete ethanol
    projects, the current definition of ``renewable biomass'' is
    contradictory to helping ensure we can grow the supply of domestic
    biofuels. It is stalling greater U.S. energy security and placing an
    unnecessary roadblock in front of the commercialization of advanced
    biofuel in many regions of the country.
    Lifecycle Analysis of Greenhouse Gas Emissions--Indirect Land Use
            Changes
        The new RFS schedule provides various carve-outs for renewable
    fuels based on their ability to reduce lifecycle greenhouse gas (GHG)
    emissions:
        Conventional Biofuel--is ethanol from corn starch, and conventional
    ethanol facilities that commence construction after the date of
    enactment of EISA 2007 must achieve a 20 percent reduction in lifecycle
    GHG emissions compared to gasoline.
        Advanced Biofuel--is renewable fuel (other than from corn starch)
    from biomass that reduces GHG emissions by 50 percent compared to
    gasoline. Cellulosic ethanol and biomass-based diesel qualify as
    advanced biofuel under the RFS.
        Cellulosic Biofuel--is renewable fuel derived from cellulose,
    hemicellulose, and lignin, and achieves a 60 percent reduction in GHG
    emissions compared to gasoline.
        I am deeply concerned that the definition of lifecycle GHG
    emissions in EISA is being construed by EPA in a manner that unfairly
    penalizes domestic grain-based ethanol, based on dubious linkages made
    to land clearing and agricultural practices in developing countries.
    There is a growing effort on the part of some interests to push this
    ``indirect land use'' theory without having done any rigorous analysis
    or peer-review.
        On March 9 of this year, President Obama issued a Directive on
    ``Scientific Integrity'' which said in part that ``Political officials
    should not suppress or alter scientific or technological findings and
    conclusions.'' According to a study completed by Global Insight on
    December 1, 2008, entitled ``Lifecycle Analysis of Greenhouse Gas
    Emissions Associated with Starch-Based Ethanol,'' basing policies such
    as the RFS or low carbon fuels standard in California on indirect land
    use change theory is ``getting politics ahead of the science.'' The
    report determines that computer-generated lifecycle predictions about
    indirect land use changes require considerably more analysis. According
    to the report, it is virtually impossible to accurately ascribe
    greenhouse gas impacts to biofuels based on indirect land use change.
    EPA's proposed enforcement of this appears to be ``getting politics
    ahead of science'' and in direct conflict with President Obama's
    Directive.
        I recognize and support that in order to conduct a thorough LCA of
    GHG emissions from biofuel crops, direct land use changes may be
    considered by EPA. However, it is inherently unfair and a disservice to
    public policy that EPA's rule examines both direct and indirect effects
    for ethanol, but does not also calculate or estimate both direct and
    indirect effects for petroleum. If EPA proceeds to make extreme
    assumptions about the carbon intensity of biofuels, relying on an
    untested ideology called ``indirect land use change,'' and remarkably
    assumes there are no such ``indirect effects'' from fossil fuels, this
    selective enforcement will place biofuels at an unfair competitive
    disadvantage in the fuels market.
        According to the Global Insight report I cited earlier in my
    testimony, it is neither fair nor accurate to attribute all current and
    future land clearing to biofuels. Changes in land use have always
    occurred and are not new, nor are biofuels the primary driver of them.
    Global population growth cannot be ignored as a factor. Remarkably,
    lifecycle analysis is being used to actually quantify GHG emissions,
    and the scientific literature shows a huge variation in estimates of
    carbon release from land clearing in general, on the order of 50
    percent plus or minus--a huge margin of error. Given this margin of
    error, it is unwise to rely on these models to make a major policy
    shift without further and more careful analysis.
        Global Insight also points out that new technology is making both
    corn and ethanol production more efficient and more environmentally
    friendly. According to the National Corn Growers Association, it takes
    nearly 40 percent less energy and land today to produce a bushel of
    corn than twenty years ago. I personally witnessed corn being planted
    ``to the inch'' of where it is desired on my way to the Omaha airport.
    Precision agriculture and genetic markers are redefining the efficiency
    of corn. Furthermore, according to the U.S. Department of Energy, since
    2001, U.S. ethanol producers have achieved a 22% drop in total energy
    use. Between 2004 and 2007, ethanol plants reduced BTU usage by between
    14% and 21%.
        As someone who oversees the operation of a new, state-of-the-art
    ethanol production facility, I can attest that the amount of energy
    used by plants has been cut by dramatic percentages in recent years.
    EPA's analysis assumes that corn ethanol plants will utilize around
    30,000 BTUs of energy to manufacture 1 gallon of ethanol. Yet, in my
    facility and others like it around the U.S., our energy use has dropped
    to an average of less than 28,000 BTUs per gallon of ethanol as shown
    below in Figure 2.2, a 6 percent decrease.
    Figure 2.2
    [GRAPHIC] [TIFF OMITTED] 51922.005

        I believe it is critical for policymakers and EPA to recognize that
    oil is becoming less efficient and more harmful to the environment, and
    that these lifecycle models should compare future sources of oil to
    future sources of biofuel on an apple-to-apple basis. With the
    technology coming online in corn and ethanol production, the carbon
    footprint is only set to improve significantly in the next 10 years;
    whereas feedstock sources for the petroleum industry, such as oil
    sands, will further degrade petroleum's carbon footprint. According to
    the Global Insight report, high oil prices incentivize the production
    of crude oil from sources such as tar sands and coal which have
    considerably higher GHG emissions than biofuels. Depending upon the
    energy source used in the mining of tar sands, well-to-pump emissions
    can be over 300% of conventional crude oil. I think it is patently
    indefensible that EPA is comparing the LCA of biofuels to that of
    petroleum in 2005, since the carbon footprint of oil will degrade
    significantly post-2005 as new oil sources like tar sands are tapped.
    Indeed, if the indirect GHG emissions of biofuels are counted toward
    the carbon footprint, so should be the indirect emissions associated
    with petroleum production.
        Ascribing indirect effects associated with land clearing in foreign
    countries not only singles out the U.S. biofuels industry for uniquely
    unfair treatment, it establishes an unworkable precedent for regulation
    of other U.S. industries under future GHG control programs. The
    consideration of land use effects in LCA of GHGs should be limited to
    domestic direct impacts associated with growing grains for ethanol
    production. I encourage the Subcommittee to urge EPA to clarify that
    the calculation of lifecycle GHG emissions is limited to direct
    impacts.
    State of the U.S. Ethanol Industry
        In closing, it is beneficial for you to hear, first hand, the major
    challenges and opportunities facing the U.S. ethanol industry today.
    The same forces making it difficult for other businesses to thrive are
    challenging ethanol producers today. Operating an ethanol plant, like
    any other production facility, requires access to capital and demand
    for your product. However, credit markets remain frozen and the
    economic recession has cooled demand for many products, so we're
    navigating the choppy sea. Specific to ethanol, the confluence of two
    unwelcome factors is seriously affecting us--unprecedented volatility
    in oil, corn, and ethanol prices and the evaporation of credit.
    Approximately 2 billion gallons of production capacity has been idled
    and many more facilities are at risk due to capital constraints.
        In order to restore sustainable industry-wide profitability,
    ethanol needs to be allowed to price into the fuel ration just as
    ingredients do in a feed ration. We need the Federal Government to
    provide a remedy to the regulation that arbitrarily restricts the
    blending of ethanol in gasoline to just ten percent. Right now, the law
    is biased against ethanol by limiting ethanol's use in a gallon of
    gasoline to just ten percent. Without question, the single most
    important thing Washington can do to help is to adjust this regulation
    so that motorists have fuel choice at the pump. Doing so will create
    green-collar jobs, help reduce the cost of fuel, reduce greenhouse gas
    emissions, and promote prosperity in rural America. Therefore, I
    strongly support the petition currently pending before EPA to allow up
    to 15 percent ethanol in gasoline, and encourage Members of the
    Subcommittee to support the waiver as well.
        Policies affecting ethanol provides you one of those rare
    opportunities to score victories on a wide array of public policy
    benefits, including supporting a domestic industry that creates jobs,
    improving energy security, and bettering the environment with
    calculations based on science rather than ideals.
        Ethanol's economic benefits are real. Today's ethanol industry
    supports more than 494,000 jobs in all sectors and provides a return on
    investment of 2.5 to 1 for every taxpayer dollar invested, according to
    a report released on February 23, 2009 by Dr. John Urbanchuk, Director
    of LECG, LLC.
        Ethanol's energy security benefits are real. According to the Clean
    Fuels Development Coalition, if ethanol was a foreign oil producer,
    only Canada would supply the U.S. with more gallons of fuel. In other
    words, the domestic ethanol industry supplies more fuel to the U.S.
    than Saudi Arabia, Venezuela, and Iraq. As a nation, we have invested
    in a strategic petroleum reserve. Have you considered the benefits of a
    strategic ethanol reserve? Ethanol does not degrade like gasoline and
    Members of this Committee would be wise to consider the national
    security benefits of having a fuel supply readily available for our
    military. Many people underestimate the ability of ethanol to power our
    equipment, including aviation. I call to your attention Greg Poe and
    the Fagen MX-2. This aircraft will perform at 19 Air shows this year,
    at 275 mph, twisting and tumbling through the air in a spectacular
    display of the performance ability of American made ethanol.
        A prosperous America lies in the hands of a committed group of
    individuals recognizing that we must not rely on foreign countries for
    our energy needs. Ethanol is the only alternative available right now
    making a substantial contribution to extending our American supply of
    energy. The determination of this Administration and this Congress can
    responsibly extend the control we have of our energy supply if you will
    fully commit to lessening our dependence on foreign oil. I and many
    others in private business are ready to help.
        In conclusion, I would like to once again thank Chairman Holden and
    Ranking Member Goodlatte for conducting this important and timely
    hearing. I look forward to your questions.

        The Chairman. Thank you, Mr. Bowdish.
        Mr. Feraci. Am I pronouncing that correctly?
        Mr. Feraci. Yes, Mr. Chairman.

             STATEMENT OF MANNING FERACI, VICE PRESIDENT OF
               FEDERAL AFFAIRS, NATIONAL BIODIESEL BOARD,
                            WASHINGTON, D.C.

        Mr. Feraci. Chairman Holden, Ranking Member Goodlatte,
    Members of the Subcommittee, I thank you for the opportunity to
    present testimony today. I am here today on behalf of the
    National Biodiesel Board, which is the national trade
    association for the U.S. biodiesel industry. Our membership
    produces a high-quality, renewable, low-carbon diesel
    replacement fuel that is readily accepted in the marketplace.
        The U.S. biodiesel industry is the only game in town when
    it comes to commercial-scale production of biomass-based diesel
    as defined in the RFS2 Program. The production and use of
    biodiesel is consistent with an energy policy that values the
    displacement of petroleum diesel fuel with low carbon renewable
    fuel, and there are significant energy security, environmental,
    and economic public policy benefits associated with biodiesel
    use.
        Yet, the industry finds itself in the midst of an economic
    crisis that threatens its future viability. The NBB is not
    seeking the creation of new Federal programs. A stable,
    reliable Federal policy framework based on existing policy will
    allow the industry to survive the current economic crisis.
    Implementation of a workable, realistic RFS2 is the key
    component of that framework.
        RFS2, for the first time, requires a renewable component in
    U.S. diesel fuel and provides a readily-attainable schedule for
    the use of biomass-based diesel that increases from 500 million
    gallons in 2009, to 1 billion gallons in 2012. To qualify for
    this program renewable fuel must reduce greenhouse gas
    emissions by 50 percent compared to the conventional diesel
    fuel it is replacing.
        The science pertaining to direct effects is well
    established. The USDA, DOE lifecycle study was initially
    published in 1998, and has been continually refined and updated
    since that time. According to this model, biodiesel reduces
    greenhouse gas emissions by 78 percent. By statute EPA must
    consider significant indirect emissions when calculating a
    renewable fuels emission profile.
        Unfortunately, it appears that the EPA's proposed rule that
    was unveiled yesterday relies on uncertain, inexact assumptions
    pertaining to indirect land use change in calculating
    biodiesel's greenhouse gas emissions profile. The result is
    that biodiesel produced from domestically-produced vegetables
    oils are disqualified from the biomass-based diesel program.
        There are many factors unrelated to U.S. biodiesel
    production that impact land use decisions abroad. For example,
    in Brazil, forestry, cattle ranching, subsistence farming drive
    land use decisions. Yet, the EPA's proposed methodology appears
    to attribute this change to U.S. biodiesel production. This
    assumption defies common sense.
        In fact, acreage in Brazil dedicated to the soybean
    cultivation actually decreased from 2004 through 2008, a time
    period during which U.S. biodiesel production increased from 25
    million gallons to 690 million gallons. If biodiesel production
    drove Brazilian land use decisions to the degree that the EPA's
    proposal asserts, the opposite would be the case.
        As a result of these dubious assumptions, EPA's proposed
    rule restricts feedstock to low carbon diesel replacement fuel
    to only animal fats and restaurant grease. Vegetable oils
    account for more than 60 percent of the feedstock that is
    available to meet RFS2 biomass-based diesel targets. And the
    RFS2 volume goals simply cannot be met if vegetable oils are
    disqualified from the program. Even under the so-called pathway
    for biodiesel that is briefly outlined in the proposed rule,
    there will not be enough feedstock available to meet the RFS2
    volume goals for biomass-based diesel. This outcome is not
    consistent with either sound science or sound energy policy.
        Last, U.S. agriculture has historically realized increased
    productivity and yields. As technology improves it is
    reasonable to assume that these gains in efficiencies will
    continue. As these efficiencies are realized, both domestically
    and around the globe, the potential impact of land use change
    due to biofuels production will be further diminished, and this
    must be recognized in EPA's greenhouse gas emission
    calculations.
        Again, Chairman Holden, Ranking Member Goodlatte, I
    appreciate the opportunity to testify today and will be more
    than happy to answer any questions you may have.
        [The prepared statement of Mr. Feraci follows:]

        Prepared Statement of Manning Feraci, Vice President of Federal
              Affairs, National Biodiesel Board, Washington, D.C.
    Summary of Testimony:
        There are significant economic, energy security and environmental
    public policy benefits associated with the domestic production and use
    of biodiesel. Though the U.S. biodiesel industry has experienced growth
    since 2004, biodiesel producers find themselves in the midst of a
    severe economic crisis that threatens the nation's ability to
    domestically produce low carbon, renewable diesel replacement fuel. In
    2009, we anticipate production of biodiesel will be less than half of
    2008 levels and utilize approximately 15% of the nation's overall
    production capacity.
        The U.S. biodiesel industry is not seeking the creation of new
    programs, but is simply asking for expedient implementation of a
    stable, reliable policy framework that will allow the industry to
    weather the current economic storm and meet the readily attainable
    goals established for Biomass-based Diesel by the Renewable Fuel
    Standard (RFS2) program, as enacted in the Energy Independence and
    Security Act (EISA) of 2007 (P.L. 110-140). Accordingly, industry asks
    the Environmental Protection Agency (EPA) to ensure that the statutory
    2009 volume goals for Biomass-based Diesel are enforced.
        RFS2, by statute, requires EPA to consider significant indirect
    emissions when calculating the greenhouse gas emission (GHG) profile of
    biofuels. Sound science and common sense dictate that a fair, honest
    evaluation of international land use decisions account for substantial
    factors completely unrelated to biofuels production such as forestry,
    subsistence farming and cattle ranching. The GHG score of a biofuel
    should be based on sound science and not be penalized due to unrelated
    factors that are driving land use changes, many of which are difficult
    to account for in GHG emission modeling. In addition, the same
    standards and evaluation must be applied to petroleum diesel fuel--the
    fuel to which Biomass-based Diesel is being compared for purposes of
    determining its GHG emission profile.
        As the RFS2 rulemaking process moves forward, EPA should work
    constructively with stakeholders to implement a workable program that
    can meet the RFS2 volume goals for Advanced Biofuels. The EPA should
    not structure the program in a manner that restricts feedstock for low-
    carbon diesel replacement fuel to only animal fats and restaurant
    grease by disqualifying vegetable oils as an eligible Advanced Biofuels
    feedstock. Vegetable oils account for more than sixty percent of the
    feedstock that is available to meet the RFS2 Biomass-based Diesel
    targets, and the RFS2 goal of displacing petroleum with low carbon
    renewable fuel simply cannot be met if vegetable oils are disqualified
    from the program. This outcome is not consistent with either sound
    science or sound energy policy.
        Last, U.S. agriculture has historically realized increased
    productivity and yields over time. As technology improves, it is
    reasonable to assume that these gains in efficiencies will continue.
    Further, there is a powerful economic incentive for agriculture
    producers around the globe to adopt more efficient practices. As these
    efficiencies are realized in the future, the potential impact of land
    use change due to biofuels production will be further diminished.
              * * * * *
        Chairman Holden, Ranking Member Goodlatte and Members of the
    Subcommittee, I thank you for the opportunity to testify today on
    behalf of the National Biodiesel Board (NBB) about the importance of
    the Renewable Fuel Standard to the U.S. biodiesel industry and the
    potential impact Indirect Land Use Change (ILUC) assumptions could have
    on implementation of this worthwhile program.
        About NBB: NBB is the national trade association representing the
    biodiesel industry as the coordinating body for research and
    development in the United States. It was founded in 1992 by state
    soybean commodity groups who were funding biodiesel research and
    development programs. Since that time, the NBB has developed into a
    comprehensive industry association which coordinates and interacts with
    a broad range of cooperators including industry, government and
    academia. NBB's membership is comprised of biodiesel producers; state,
    national and international feedstock and feedstock processor
    organizations; fuel marketers and distributors; and technology
    providers.
        Background and Industry Overview: Biodiesel is a diesel replacement
    fuel made from agricultural oils, fats and waste greases that meets a
    specific commercial fuel definition and specification. The fuel is
    produced by reacting feedstock with an alcohol to remove the glycerin
    and meet the D6751 fuel specifications set forth by the American
    Society for Testing and Materials (ASTM International). Biodiesel is
    one of the best-tested alternative fuels in the country and the only
    alternative fuel to meet all of the testing requirements of the 1990
    amendments to the Clean Air Act.
        Biodiesel is primarily marketed as a 5% blending component with
    conventional diesel fuel, but can be used in concentrations up to 20%.
    It is distributed utilizing the existing fuel distribution
    infrastructure with blending occurring both at fuel terminals and
    ``below the rack'' by fuel jobbers. Biodiesel is beginning to be
    distributed through the petroleum terminal system. To date, biodiesel
    is available in over 40 fuel distribution terminals. In the past year,
    two major pipeline companies have successfully tested B5 blends in
    pipelines, and the biodiesel industry has committed funds to continue
    to study the technical needs required for moving biodiesel through U.S.
    pipelines. Already, biodiesel is moved through pipelines in Europe and
    extending that capability in the U.S. would significantly increase
    biodiesel penetration in the U.S. diesel fuel market.
        Biodiesel Public Policy Benefits: There are compelling public
    policy benefits associated with the enhanced production and use of
    biodiesel in the U.S.
        Biodiesel Reduces our Dependence on Foreign Oil: Biodiesel can play
    a major role in expanding domestic refining capacity and reducing our
    reliance on foreign oil. The 690 million gallons of biodiesel produced
    in the U.S. in 2008 displaced 38.1 million barrels of petroleum, and
    increased production and use of biodiesel will further displace foreign
    oil. In addition, biodiesel is an extremely efficient fuel that creates
    3.2 units of energy for every unit of fuel that is required to produce
    the fuel.
        Biodiesel is Good for the Environment: Biodiesel is an
    environmentally safe fuel, and is the most viable transportation fuel
    when measuring its carbon footprint, lifecycle and energy balance. The
    U.S. Department of Agriculture (USDA)/Department of Energy (DoE)
    lifecycle study shows a 78% reduction in direct lifecycle
    CO2 emissions for B100. One billion gallons of biodiesel
    will reduce current lifecycle greenhouse gas emissions by 16.12 billion
    pounds, the equivalent of removing 1.4 million passenger vehicles from
    U.S. roads. In 2008 alone, biodiesel's contribution to reducing
    greenhouse gas emissions was equal to removing 980,000 passenger
    vehicles from America's roadways.
        Biodiesel's emissions significantly outperform petroleum-based
    diesel. Research conducted in the U.S. shows biodiesel emissions have
    decreased levels of all target polycyclic aromatic hydrocarbons (PAH)
    and nitrited PAH compounds, as compared to petroleum diesel exhaust.
    These compounds have been identified as potential cancer causing
    compounds.
        Biodiesel is the only alternative fuel to voluntarily perform EPA
    Tier I and Tier II testing to quantify emission characteristics and
    health effects. That study found that B20 (20% biodiesel blended with
    80% conventional diesel fuel) provided significant reductions in total
    hydrocarbons; carbon monoxide; and total particulate matter. Research
    also documents the fact that the ozone forming potential of the
    hydrocarbon emissions of pure biodiesel is nearly 50% less than that of
    petroleum fuel. Pure biodiesel typically does not contain sulfur and
    therefore reduces sulfur dioxide exhaust from diesel engines to
    virtually zero.
        The Biodiesel Industry is Creating Green Jobs and Making a Positive
    Contribution to the Economy: In 2008 alone, the U.S. biodiesel industry
    supported 51,893 jobs in all sectors of the economy. This added $4.287
    billion to the nation's Gross Domestic Product (GDP) and generated
    $866.2 million in tax revenue for Federal, state and local governments.
        By conservative estimates, there is domestic feedstock available to
    support 1.77 billion gallons of annual biodiesel production in the U.S.
    The domestic industry has the capacity to support this level of
    production. The production of 1.77 billion gallons of fuel would
    support 78,619 jobs; add $6.660 billion to the GDP; displace 97.8
    million barrels of petroleum; generate $1.345 billion in revenue for
    Federal, state and local governments; and reduce greenhouse gas
    emissions by 27.4 billion pounds--the equivalent of removing 2.38
    million passenger vehicles from U.S. roads.
        The Biodiesel Industry Stimulates Development of New Low-Carbon
    Feedstocks: The feedstock used to produce U.S. biodiesel has
    increasingly diversified, with waste products such as animal fat and
    used restaurant grease (yellow grease) making up a larger portion of
    the feedstock used to produce fuel. Biodiesel production is currently
    the most efficient way to convert lipids into low-carbon diesel
    replacement fuel, and as a result, industry demand for less expensive,
    reliable sources of fats and oils is stimulating promising public,
    private and nonprofit sector research on new alternative feedstocks
    such as algae.
        Algae's potential as a source of low carbon fuel has been well
    documented, and a stable, growing biodiesel industry is necessary if
    the U.S. is to eventually benefit from the commercial scale production
    of algal-based biofuels. The NBB estimates that for every 100 million
    gallons of biodiesel that is produced from algae, 16,455 jobs will be
    created and $1.461 billion will be added to the GDP.
        U.S. Biodiesel Industry is Facing Severe Economic Hardship: Despite
    recent growth, the industry is in the midst of an economic crisis.
    Plants are having difficulty accessing operating capital. Volatility in
    commodity markets; reduced demand and inability to compete in the
    European marketplace are making it difficult for producers to sell
    fuel. Last, uncertainty relating to Federal policy that is vital to the
    industry's survival is sending inconsistent signals to the marketplace
    and undermining investor confidence.
        If prolonged, this downturn will lead to a severe retraction in
    U.S. biodiesel production capacity. Due to current market conditions,
    less than \1/3\ of the industry's facilities are currently producing
    fuel. NBB estimates that absent any change in Federal policy, U.S.
    biodiesel production will likely fall to 300 million gallons in 2009,
    which would cost the U.S. economy more than 29,000 jobs. This situation
    threatens the nation's ability to meet the advanced biofuels goals
    established in the 2007 Energy Bill.
        A Reliable Policy Framework is Needed for U.S. Biodiesel Industry:
    The U.S. biodiesel industry is not seeking the creation of new
    programs. Instead, common-sense improvements and thoughtful
    implementation of existing initiatives will help the industry survive
    in this difficult economic climate. Specifically, a multi-year
    extension of the biodiesel tax incentive and successful implementation
    of a workable RFS2 are needed if the nation is to reap the future
    economic, environmental, and energy security benefits associated with
    the production and use of biodiesel. For purposes of today's testimony,
    I will focus on RFS2.
        The Energy Independence and Security Act and the Renewable Fuel
    Standard: The Energy Independence and Security Act (P.L. 110-140),
    enacted on December 19 2007, significantly expanded and improved the
    RFS.
        By statute, RFS2 provides for the use of 36 billion gallons of
    renewable fuels in the U.S. by 2022. The program establishes a use
    schedule for Conventional Biofuels and Advanced Biofuels. The schedule
    for Conventional Biofuels, which must reduce GHG emissions by 20%
    compared to the baseline fuel it is displacing, increases from 10.5
    billion gallons in 2009 to 15 billion gallons in 2015. From 2015
    through 2022, the use requirement for Conventional Biofuels remains
    constant at 15 billion gallons. Biofuel production facilities placed in
    service prior to enactment of P.L. 110-140 are exempt from 20% GHG
    reduction requirement that is applicable to Conventional Biofuels.
        RFS2 also establishes a use schedule for Advanced Biofuels that
    begins at 600 million gallons in 2009 and increases to 21 billion
    gallons by 2022. Within the Advanced Biofuels schedule, there are
    specific use and GHG reduction requirements for Cellulosic Biofuels,
    Undifferentiated Advanced Biofuels, and Biomass-based Diesel. The
    statutory date of enactment for the RFS2 program is January 1, 2009.
        Implementation of a Workable RFS2 Biomass-based Diesel Schedule of
    Vital Importance to the U.S. Biodiesel Industry: For the first time,
    RFS2 specifically requires a renewable component in U.S. diesel fuel as
    part of the program's Advanced Biofuels schedule. Specifically, RFS2
    requires the use of 500 million gallons of Biomass-based Diesel in
    2009; 650 million gallons in 2010; 800 million gallons in 2011; and 1
    billion gallons in 2012. Between 2012 and 2022, a minimum of 1 billion
    gallons must be used, and the Administrator of the EPA has the
    authority to set the use requirement at a higher level.
        To qualify as Biomass-based diesel, fuel must reduce greenhouse gas
    (GHG) emissions by 50% compared to conventional diesel fuel. The EPA
    Administrator is provided the authority to reduce the GHG emission
    target to 40%. By statute, the Biomass-based Diesel requirement starts
    in 2009, and thus, is the first component of the Advanced Biofuels
    schedule to be implemented. Though fuels in addition to biodiesel will
    in all likelihood qualify for this schedule, the U.S. biodiesel
    industry is the only entity producing low carbon, renewable diesel
    replacement fuel at commercial scale that is readily accepted in the
    domestic marketplace.
        As is mentioned earlier in this testimony, the U.S. biodiesel
    industry is in the midst of an economic crisis. Plants are closing and
    production is well below comparable levels from last year. The EPA has
    the regulatory authority it needs to implement a workable program that
    is consistent with sound energy and environmental policy, and
    successful implementation of RFS2 will help create the market demand
    that will allow the industry to survive. A viable domestic biodiesel
    industry is in the nation's best interests, and expedient
    implementation of a workable Biomass-based Diesel program is a top
    industry priority. Accordingly, industry asks the EPA to take concrete
    steps to ensure that the 2009 volume goals established by statute for
    Biomass-based Diesel are enforced.
        The Inexact Nature of Indirect Land Use Change (ILUC) Assumptions:
    As mentioned previously, renewable diesel replacement fuel must reduce
    GHG emissions by 50% compared to conventional diesel fuel to qualify
    for the Biomass-based Diesel program. The science pertaining to direct
    emissions is well established. The USDA/DoE lifecycle study was
    initially published in 1998, and has been continually refined and
    updated since this time. According to this model, biodiesel reduces GHG
    emissions by 78%.
        By statute, RFS2 specifies that significant indirect emissions are
    to be considered when calculating a renewable fuel's GHG emission
    profile. EPA has opted to account for ILUC, in particular international
    land use assumptions, in its GHG calculations as part of the rulemaking
    process. There is neither consensus in the scientific community nor a
    widely accepted methodology that could be deemed credible to accurately
    calculate the impact of U.S. biofuel production on international land
    use decisions. Nevertheless, the EPA's decision to rely on a
    questionable GHG methodology inaccurately attributes significant
    deforestation in South America to the cultivation of oilseeds such as
    soybeans and canola produced in the U.S.
        The U.S. biodiesel industry currently produces the most sustainable
    fuel available in the marketplace. The NBB fully supports efforts and
    initiatives that are designed to protect sensitive ecosystems such as
    the rainforests in South America and Southeast Asia.
        With that said, sound science and common sense dictate that a fair,
    honest evaluation of international land use decisions account for
    substantial factors completely unrelated to biofuels production such as
    forestry, subsistence farming and cattle ranching. The GHG score of a
    biofuel should not be penalized due to unrelated factors that are
    driving land use changes, many of which are difficult to account for in
    GHG emission modeling. In addition, the same standards and evaluation
    must be applied to petroleum diesel fuel--the fuel to which Biomass-
    based Diesel is being compared for purposes of determining its GHG
    emission profile.
        It is our understanding that the EPA's methodology places
    significant emphasis on land use changes in Brazil. Specifically, the
    EPA attributes deforestation in the Brazilian rainforest to U.S.
    biodiesel production, and this dubious assumption is used as the
    rationale to penalize the GHG emission score of U.S. biodiesel produced
    from vegetable oils. From 2004 through 2008, U.S. biodiesel production
    increased from 25 million gallons to 690 million gallons. If U.S.
    biodiesel production was causing significant land use change in Brazil,
    common sense would dictate land dedicated to Brazilian soybean
    production would have shown a corresponding increase.
        Yet in 2004, soybean production in Brazil covered 22.917 million
    hectares. In 2008, soybean production accounted for 21.400 million
    hectares--a decrease of 1.5 million hectares. As U.S. biodiesel
    production increased by 665 million gallons, land dedicated to soybean
    cultivation in Brazil decreased by 1.5 million hectares--a real world
    outcome that casts significant doubt on EPA's preliminary assumptions
    and again highlights that other significant factors outside of U.S.
    biofuels production drive land use decisions.
        Impossible to Meet Biomass-based Diesel Requirements Without
    Vegetable Oils as Qualifying Feedstocks: As the rulemaking proceeds and
    is ultimately finalized, a program structured in a manner that allows
    vegetable oils, including domestically-produced soybean and canola oil,
    to qualify as feedstock for the Biomass-based Diesel schedule is
    consistent with sound science and policy. Vegetable oils account for
    more than sixty percent of the feedstock that is available to meet the
    RFS2 Biomass-based Diesel targets, and the use requirements established
    by this component of the Advanced Biofuels schedule simply cannot be
    met if these feedstocks are disqualified from the program. We are hard
    pressed to believe this potential outcome is consistent with the will
    of Congress or sound environmental policy that values the displacement
    of petroleum diesel with low-carbon renewable fuels.
        Absent vegetable oils as a qualifying feedstock, biofuel producers
    will be forced to rely almost entirely on animal fats and yellow grease
    (used restaurant grease) to meet the RFS2 Biomass-based Diesel
    requirements. The U.S. biodiesel industry estimates that even with the
    most optimistic assumptions, the most biodiesel that could be produced
    in a year from this pool of limited feedstock would be 410 million
    gallons. Though animal fats and restaurant grease are important
    resources for biodiesel production--and U.S. producers can make quality
    fuel that meets the ASTM D6751 fuel specification from this feedstock--
    there simply will not be enough of these feedstocks to produce the fuel
    needed to meet either the 500 million gallons of Biomass-based Diesel
    required in 2009 or the 1 billion gallons that is ultimately required
    in 2012. By contrast, there is ample feedstock to meet the Biomass-
    based Diesel schedule if vegetable oils are permitted as a feedstock.
        It is also important to note other potential unintended policy
    impacts if the Biomass-based Diesel feedstock is limited to animal fats
    and restaurant grease. For example, this would add significant
    volatility and disruption in the markets as it pertains to the pricing
    of these commodities, and could compel entities not impacted by the
    RFS2 program that currently use these commodities in the production of
    other goods to seek lipids from less-sustainable sources. In addition,
    given winter and summer fuel blending regimes that are widely accepted
    and used in the marketplace, a program that limits U.S. biodiesel
    production to animal fats and restaurant grease would in essence make
    the U.S. industry seasonal in nature. Neither of these unintended
    outcomes is consistent with sound energy or environmental policy.
        GHG Calculations Must Account for Improved Agriculture Yields and
    Efficiency: U.S. agriculture has historically realized increased
    productivity and yields over time. As technology improves, it is
    reasonable to assume that these gains in efficiencies will continue.
    Further, there is a powerful economic incentive for agriculture
    producers around the globe to adopt more efficient practices. As these
    efficiencies are realized in the future, the potential impact of land
    use change due to biofuels production will be further diminished.
        New technology will add significantly to the U.S. raw material
    supply. Though the feedstock used to produce U.S. biodiesel has grown
    more diversified over time, soybean oil has been the most utilized
    biodiesel feedstock to date in the U.S. Based upon historical yield
    trends, domestic production of soybeans will continue to increase.
    However, a major research focus of companies such as Pioneer and
    Monsanto has been to create ``virtual acres'' through stepwise
    enhancements in yield technology and/or oil content. Monsanto plans to
    introduce new technology that can increase soybean yields 9 to 11
    percent. Pioneer, a DuPont Company, is commercializing soybean
    varieties that increase yields by as much as 12 percent. After years of
    research investments by the life science companies, these technologies
    have reached commercialization and are set to have a meaningful impact
    on soybean yields in 2010. More than 90 percent of U.S. farmers
    currently utilize herbicide-resistant soybean varieties, demonstrating
    farmers' willingness and desire to adopt technology that can enable
    improved profits through increased yields or decreased costs. If this
    same 90 percent of U.S. soybean acres adopted the new yield technology,
    more than 60 million acres could see a ten percent increase in yield.
    This equates to more than 250 million additional bushels of soybeans
    (the equivalent of 380 million gallons of biodiesel) without increasing
    acreage in the U.S.
        The same benefit can be achieved by increasing soybean oil content.
    Current industry genetic programs suggest ten percent oil increases are
    achievable within the next few years, and increasing soybean oil
    content by that percentage would generate approximately 120 million
    gallons of additional oil if adopted on 50 percent of soybean acreage.
    New approaches for achieving even higher oil levels in plants are being
    actively researched. The NBB has partnered with the Donald Danforth
    Plant Science Center to identify novel approaches to enhance oil
    production in soybeans and other oilseeds. This work centers on the
    hypothesis that the ability to utilize available carbon limits oil
    production. Therefore, the Danforth Center's work will focus on
    engineering carbon sinks that will pull metabolites through the oil
    production process in plants. This is a 3 year program that was
    initiated in 2008.
        The soybean industry will continue to play a key role in providing
    feedstock for the biodiesel industry for years to come. Based upon
    current technology available to soybean producers, if processing
    capacity expands it is reasonable to project the production of at least
    780 million gallons of biodiesel with existing soybean oil supplies in
    2012. This estimate does not take into consideration soybean oil
    exports, amounting to more than 300 million gallons of soybean oil in
    2008, which could be diverted into domestic biodiesel production. Nor
    does it take into account an estimated 1 billion bushels of soybeans
    that are exported and could be a source of biodiesel feedstock if the
    domestic crushing industry further expanded capacity.
        In Conclusion: The provision in RFS2 establishing the Biomass-based
    Diesel Schedule is consistent with energy and environmental policy that
    values the displacement of petroleum diesel with low carbon renewable
    fuels. Expedient implementation of a workable RFS2 program is a top
    priority for the U.S. biodiesel industry that will allow the nation to
    continue reaping the economic, energy and environmental benefits
    associated with the increased production and use of biodiesel.
        Chairman Holden, Ranking Member Goodlatte, and Members of the
    Subcommittee, I again thank you for having the opportunity to testify
    before you today, and I would be pleased to answer any questions you
    may have.

        The Chairman. Thank you.
        Mr. Pechart.

    STATEMENT OF MICHAEL L. PECHART, DEPUTY SECRETARY FOR MARKETING
                      AND ECONOMIC DEVELOPMENT AND
              POLICY DIRECTOR, PENNSYLVANIA DEPARTMENT OF
                      AGRICULTURE, HARRISBURG, PA

        Mr. Pechart. Chairman Holden, Ranking Member Goodlatte, and
    Members of the Committee, good afternoon.
        As the Chairman so eloquently recognized, Pennsylvania has
    much to offer the biofuels effort, the environment and the
    renewable energy economy developing in the nation from
    feedstock such as wood and food waste. A recently-published
    report by the Hardwoods Development Council estimates
    sufficient woody biomass exists to allow for 6 million dry tons
    of woody biomass harvested annually, on a sustainable basis,
    with the potential of producing 6 million megawatt hours of
    electricity among 45 small power plants or 540 million gallons
    of cellulosic ethanol or 300 million, 40 pound bags of wood
    pellets.
        Although there is a debate of how much volume that could
    practically produce, we know that current paper and
    manufactured board business in Pennsylvania uses about 1
    million tons annually, and in the early 1990s, it used 3
    million tons. So there is a strong emphasis and significant
    amount of renewable energy that could be produced from this.
        The report concluded that small distributed projects such
    as Fuels for Schools, district heating or combined heating and
    power will have the most chance for sustainable feedstock
    supply, and therefore, success in Pennsylvania. Wood energy has
    the potential to be a significant part of achieving the goals
    of Pennsylvania's renewable portfolio standards, while also
    facilitating the production of advanced biofuels.
        Proposed renewable biomass definition provisions in the
    proposed regulations for the Renewable Fuel Standard would not
    allow Pennsylvania to reach its full feedstock supply
    potential. Limiting the use of forest biomass will disadvantage
    some states like Pennsylvania and disincentivize achieving
    energy mandates, increasing costs to consumers, and creating
    new disparities in economic development.
        To encourage the maximum development of all renewable
    sources of energy, the Renewable Fuel Standard should be as
    inclusive as possible as to feedstocks and methods rather than
    to arbitrarily discourage any source on its face. Wood and
    woody biomass is a necessary, logical, and sustainable
    component of a renewable energy portfolio plan. States should
    be in the best position to sustainably manage these decisions
    on a case-by-case basis as they work to achieve the portfolio
    standards that are most relevant to their resources and their
    needs. To that end Pennsylvania has already published formal
    guidance on harvesting woody biomass for energy in our state.
        Another definitional category I would like to comment on is
    food waste. Food waste needs to be clearly defined and
    sufficiently broad to allow for an array of feedstocks such as
    nutshells, cocoa hulls, husks, seeds, and fruit pits.
    Agriculture is the number one industry in Pennsylvania,
    resulting in mass production of foods, including snacks, canned
    goods, and dairy products. The Act must provide an expanded
    definition of food waste to include processing waste and
    cannery waste as renewable sources of biomass energy.
        Pennsylvania, I would note, currently has two anaerobic
    digesters operating that are processing cheese waste to produce
    methane. Yellow, brown, and trapped grease should be provided
    flexibility to allow local collection and use as a renewable
    energy feedstock through expanded general permits within
    states. Renewable energy goals should support the use of yellow
    grease animal fat for biodiesel or methane production, or to
    use these materials directly as boiler fuel. Provisions should
    also be included for unsuitable, outdated, and altered lots of
    feed, grain, or animal products to include biomass energy
    production alternatives.
        The logic that appears to be applied in the indirect
    lifecycle greenhouse gas accounting for land conversion such as
    recultivating fallow land is to assume that a vast carbon sink
    has now been lost and would remove any eligibility for biofuels
    production. Fallow land should not be subject to indirect land
    use lifecycle greenhouse gas calculations because it
    inappropriately imposes a penalty. Such acreage has provided
    for unintentional, temporary, and limited carbon storage. It is
    inappropriate that fallow land conversion automatically assume
    a massive soil carbon increase. Soil carbon release is most
    dependent upon tillage practices, and I would note in
    Pennsylvania in the last 2 years we have moved 50 percent of
    our agricultural production based on no-till, which is a
    tremendous accomplishment.
        As structured, I don't believe the definitions allow for
    biofuels production that may be facilitated through the growth
    of warm season grasses on coal mine reclamation sites essential
    to both Pennsylvania and the Chesapeake Bay Region. I would
    note just in Pennsylvania alone we have 180,000 acres of land,
    abandoned mine land that could be growing energy crops right
    now.
        This definition would need to define crops such that it is
    clearly broad enough to include grasses, even cool season
    grasses such as miscanthus, and it can't be limited to ag lands
    but also needs to preserve forestlands.
        In closing, it should be recognized that there is not a
    single solution or prescription for renewable energy that fits
    all states equally. Some are blessed with great solar or wind
    energy potential, and others like Pennsylvania have an
    abundance of wood and waste and agricultural waste energy
    potential.
        Moreover, there is no single type of feedstock or biofuel
    that is the silver bullet for our renewable energy economy. To
    the contrary, it is only with a mix of crops, with the right
    crop grown on the right acre, with the best management
    practices in place, and other sustainably available renewable
    feedstocks that we can achieve energy, security, economic, and
    water quality goals.
        Thank you, Congressman Holden and Members of the Committee.
        [The prepared statement of Mr. Pechart follows:]

         Prepared Statement of Michael L. Pechart, Deputy Secretary for
     Marketing and Economic Development and Policy Director, Pennsylvania
                   Department of Agriculture, Harrisburg, PA
        Pennsylvania and the Chesapeake Bay Region are rich in natural
    resources, agricultural land and products, and renewable energy
    feedstocks. Because of these facts, in addition to the outstanding
    leadership and expertise of individuals, organizations, universities,
    and government agencies the region is poised to lead the nation in
    renewable energy production. The same geographic diversity that allows
    us to produce and process such a wide range of crops and commodities
    also dictates that our renewable energy potential come from a suite of
    diversified alternatives. Pennsylvania leads the nation in the growing
    volume of hardwood species, with 17 million acres in forestland. We
    have been the leading producer of hardwood lumber in the United States,
    with production of over 1.1 billion board feet in 2006, and
    Pennsylvania leads in the export of hardwood lumber. Recent U.S. Forest
    Service data shows that our forest growth to harvest rate is better
    than two to one. Our vast renewable resource puts the hardwoods
    industry at the forefront of manufacturing in the Commonwealth. In
    2006, the industry output was $17 Billion, employing nearly 86,000
    people.
        Endless possibilities to create advanced biofuels are provided by
    the definitions of H.R. 6 of the 110th Congress, the ``Energy
    Independence Act of 2007.'' However, Pennsylvania has much to offer the
    biofuels effort, the environment and the economy regarding feedstocks
    from wood and food waste, and indirect lifecycle greenhouse gas
    accounting that also should be taken into consideration in the current
    language.
        Pennsylvania recognizes the importance of this resource and
    industry to the Pennsylvania economy. The General Assembly of
    Pennsylvania created the Hardwoods Development Council within the PA
    Department of Agriculture to promote development and expansion of the
    industry. A recently published report of a Council sponsored Task Force
    on ``The Low Use Wood Resource'' estimates sufficient woody biomass
    exists to allow for 6 million dry tons of to be harvested annually on a
    sustainable basis with the potential of producing 6 million megawatt
    hours of electricity among 45 small power plants; or 540 million
    gallons of cellulosic ethanol; or 300 million 40 pound bags of wood
    pellets. Although there is debate on how much of that volume could
    practicably be available for harvest, we know that current paper and
    manufactured board production in PA uses about 1 million tons, and in
    the early 1990s used 3 million tons; so there is strong evidence to
    show that a significant amount of renewable energy can be produced. The
    majority of Pennsylvania's forestland is owned privately by
    approximately 700,000 different people. The report concluded that
    small, distributed projects such as, ``Fuels for Schools'', district
    heating or combined heating and power will have the most chance for
    sustainable feedstock supply and therefore success in Pennsylvania.
    Wood energy has the potential to be a significant part of achieving the
    goals of Pennsylvania's Renewable Portfolio Standards while also
    facilitating the production of advanced biofuels.
        Proposed renewable biomass definition provisions in the national
    Renewable Fuel Standard, taken from H.R. 6 of 2007 would not allow
    Pennsylvania to reach its full feedstock supply potential. Limiting use
    of forest biomass will disadvantage some states like Pennsylvania and
    disincentivize achieving energy mandates, increasing costs to consumers
    and creating new disparities in economic development.
        To encourage the maximum development of all energy sources,
    legislation should be as inclusive as possible as to feedstocks and
    methods, rather than to arbitrarily discourage any source on its face.
    Wood and woody biomass is a necessary, logical and sustainable
    component of a renewable energy portfolio plan. States should be in the
    best position to sustainably manage these decisions on a case-by-case
    basis as they work to achieve the portfolio standards that are most
    relevant to their resources and needs. To that end for example,
    Pennsylvania has already published formal Guidance On Harvesting Woody
    Biomass for Energy in Pennsylvania which can be downloaded at http://
    www.dcnr.state.pa.us/PA_Biomass_guidance_final.pdf.
        Federal policy should promote sustainable forest management which
    includes the proper and appropriate use of low value biomass material.
    Management of this resource improves forest health, can improve habitat
    quality, contributes to pest control, and reduces fire risk; as well as
    creating economic activity. Definitions of eligible biomass feedstocks
    should put working forests and forest industries on an equal basis with
    other renewable energy sources. Federal lands must be included into the
    renewable energy equation. It is illogical and counter-productive to
    create another disincentive to proper silvicultural management on
    Federal lands that are already in desperate need of treatments. Removal
    of biomass material can help improve forest health, control insects and
    disease, and prevent catastrophic wildfire; as well as significantly
    contributing to renewable energy goals and having positive impacts on
    rural economies. This is particularly evident on the Allegheny National
    Forest.
        ``Food waste'' needs to be very clearly defined and sufficiently
    broad to allow for an array of feedstocks such as nut shells, cocoa
    hulls, husks, seeds/pits, etc. Agriculture is the number one industry
    in Pennsylvania resulting in mass production of foods from snacks,
    canned goods, and dairy products. The Act must provide an expanded
    definition of food waste to include processing waste and cannery waste
    as renewable sources for biomass energy. Pennsylvania currently has two
    anaerobic digesters operating by processing cheese whey to methane.
    Yellow, brown and trap grease should be provided flexibility to allow
    for local collection and use as a renewable energy feedstock through
    expanded general permits within states. Renewable energy goals should
    support the use of yellow grease and animal fats for biodiesel or
    methane production or to use these materials directly as boiler fuel.
    Provisions should also be included for unsuitable, out dated, and
    altered lots of feed, grain, or animal products to include as biomass
    energy production alternatives.
        As structured, I don't believe the definitions allow for biofuels
    production that may be facilitated through the growth of warm-season
    grasses on coal mine reclamation sites--essential to both Pennsylvania
    and Chesapeake Bay Region. The definition would need to define
    ``crops'' such that it is clearly broad enough to include grasses (even
    cool-season grasses such as Miscanthus) and it can't be limited to
    agricultural lands but also needs to preserve forested land.
        The broader implication for the nation is the interface of this
    first part of the definition and attempts to incorporate indirect
    lifecycle greenhouse gas standards related to biofuel development. This
    approach is well-intended but the limited research to date seems to
    assign a permanent and continual loss of soil carbon when a farmer
    turns over a fallow field. The current definition allows for biofuel
    feedstock to be produced from recultivating of fallow fields (fallow
    prior to 2007). This is appropriate. Those lands have most likely been
    fallow primarily due to the poor economics for agricultural commodities
    in all but the most recent years.
        The logic that appears to be applied in the indirect lifecycle
    green house gas accounting for land conversion, such as recultivating
    fallow land, is to assume that a vast carbon sink has now been lost and
    would remove any eligibility for biofuels production. Fallow land
    should not be subject to indirect land use lifecycle greenhouse gas
    calculations because it inappropriately imposes a penalty. Such acreage
    has provided for unintentional, temporary and limited carbon storage.
    It is inappropriate that fallow land conversion automatically assumes a
    massive soil carbon release. Soil carbon release is mostly dependent
    upon which tillage practice is utilized. Drill-seeding and no-till
    planting significantly reduces soil carbon release than conventional
    tillage of fallow lands. In Pennsylvania, we have seen a dramatic shift
    away from conventional tillage practices in the last 2 to 3 years.
    These practices should be encouraged in these definitions and they
    should be accounted for accordingly for there increased environmental
    benefits instead of applying a blanket calculation for any fallow land
    conversion. We are sitting on at least 200 million acres of once
    farmed, now abandoned land in the U.S., much of it in the Northeast. A
    great research opportunity and motivation for sustainable agriculture
    exists if this land could be brought back into production in ways that
    also increase carbon sequestration through use of perennials.
    Documenting that positive Land Use Changes impact provides additional
    income from other farmers, or ultimately consumers, would provide
    incentives for farmers to implement sustainable practices.
        While the indirect land use analysis under the RFS is specific to
    carbon, and is global in scale, we can refer to a local study
    demonstrating indirect land use effects on water quality. The Biofuels
    for the Bay Report, published by the Chesapeake Bay Commission in 2007,
    identified the potential water quality impacts to the Chesapeake Bay
    when high commodity prices increase corn acreage. The report found that
    when grown with typical levels of best management practices, the
    nitrogen loads from increased corn acreage could increase Bay nitrogen
    levels by up to 5 million pounds--a level that would eclipse annual
    progress in nitrogen reductions. One of the recommendations that
    resulted from this report was a focus on development and production of
    a next-generation biofuels industry--one that uses biomass such as
    switchgrass, forest thinnings, or fast-growing trees as feedstocks.
    These feedstocks do not require significant nutrient inputs and can act
    as riparian buffers for other agricultural land. These same feedstocks
    would most likely score well under an indirect land use analysis for
    carbon, because they have the capacity to sequester carbon and, since
    they are able to be grown on relatively marginal land, they do not
    directly compete with food and feed crops.
        This is not to say that corn is a bad crop. Corn is an important
    source of food and feed to this country and the world. When grown using
    a full suite of best management practices, its environmental impact is
    minimal. However, our dairy, cattle, and hog growers and food
    processors were significantly impacted when grain prices spiked in
    reaction to, among other things, increasing corn ethanol production. We
    acknowledge that speculation, as opposed to true supply and demand, was
    a contributor to the price volatility, but the effect was the same.
        Additionally, first-generation ethanol, such as that produced from
    corn, is an important first step in the evolution to cellulosic and
    other advanced biofuels. As we anxiously await commercial-scale
    technology for advanced biofuel production, first-generation ethanol
    will help to grow the distribution and other infrastructure needed for
    a mature biofuels industry. In the meantime, Pennsylvania and other
    states in the Chesapeake Bay region are encouraging the production of
    first-generation ethanol from winter cover crops such as barley.
    Because they are grown on the same acreage, cover crops do not compete
    with corn or soybeans. Cover crops also reduce excess nitrogen in the
    soil and reduce runoff, improving water quality.
        It should be recognized that there is not a single solution or
    prescription for renewable energy that fits all the states. Some are
    blessed with great solar or wind energy potentials, and others like
    Pennsylvania have an abundance of wood energy potential. Moreover,
    there is no single type of feedstock or biofuel that is the silver
    bullet for renewable energy. To the contrary, it is only with a mix of
    crops, with the right crop grown on the right acre, with the right best
    management practices, and other sustainably available renewable
    feedstocks that we can achieve both our energy security, economic, and
    water quality goals.

        The Chairman. Thank you.
        Ms. Webster.

             STATEMENT OF ANITRA B. WEBSTER, OWNER, FAMILY
              FOREST, LYNCHBURG, VA; ON BEHALF OF AMERICAN
                           FOREST FOUNDATION

        Ms. Webster. Thank you for the opportunity to appear before
    you today to talk about the Renewable Fuel Standard and how it
    could impact family forest owners. I am here today representing
    the American Forest Foundation, home of the American Tree Farm
    System', a network of over 91,000 family forest
    owners across the country who are committed to conservation.
        Many of you are probably familiar with tree farmers in your
    own state, family forest owners who typically own small tracks
    of forest and manage it for wildlife, hunting, fishing,
    recreation, and timber production. My family forest is located
    near Lynchburg, Virginia, in Big Island, where I actively
    manage about 390 acres. I entered the tree farm system decades
    ago and have managed my land sustainably according to
    international standards since then.
        Now, you probably are asking yourself why do family forest
    owners care about the Renewable Fuel Standard. Well, it is
    pretty simple. Forest biomass can and should be an important
    source for renewable fuels, and right now we really need new
    markets with the falling off of the housing industry.
        Additionally, beyond my interest as a family landowner,
    allowing the use of forest biomass to meet our energy needs
    also helps reduce greenhouse gases and improves the health of
    our forests. If we wish to generate a large portion of our
    energy needs from renewables, forest biomass is a cost-
    effective, readily available, sustainable, and renewable source
    of material that can help us meet these needs.
        Unfortunately, the Renewable Fuel Standard passed in
    Congress in 2007, essentially left out the opportunity for
    forest family owners and privately-held forests to supply
    biomass for the production of renewable fuels.
        I know Congress I working on a renewable electricity
    standard and considering the same restrictions on the use of
    biomass from my lands for that electricity generation. I am
    here today to urge you to fix the standard and allow all
    sustainably produced forest biomass from both planted forests
    and those that naturally regenerate.
        I would like to point out a few problems with the current
    approach to restrict forest biomass as it might be applied to
    my land. The first problem is a limitation to only actively-
    managed tree plantations. I happen to have about 20 to 30 acres
    stand of white pine that I planted in the late 1980s in
    abandoned fields, and Photo 1 on your attachment will show
    that. This stand is now growing to maturity and is ready for
    thinning. Thinning like this will help enhance the wildlife
    habitat and allow the trees left behind to grow to a full
    height and maturity.
        But under the current definition of renewable biomass it is
    not clear whether my planted pine stands are considered
    actively-managed tree plantations. If I were to talk about it
    myself, I don't think I would call it that since I only do
    minor work on the plantation, and I don't use any pesticides or
    herbicides or fertilizers for that matter.
        Right now there is no market for the thinned trees mostly
    because of the timber market declines that are happening. So it
    is not economical to do the thinning of the forest that the
    forest needs right now. A renewable energy market could help me
    recover the cost of doing these sorts of activities, and that
    would, of course, improve the environment at a much lower cost.
        The second problem is a limitation on the use of biomass
    from naturally-regenerating forests. Roughly 340 acres of my
    land is not planted forests but rather forestland that
    generates naturally, as you can see in Photo 2 on that
    attachment. A number of years ago I harvested a fair bit of
    older trees, selling them for the lumber, but, obviously, left
    trees behind for seed production and shade so that the new
    growth could develop. This, obviously, is the way we regenerate
    a forest, and it had, indeed, ensured a strong, natural
    comeback.
        While most of the trees removed in the forest will sell for
    lumber, not every tree is straight enough, so we either sell it
    for pulp or if there is no market, we have to leave it in the
    forest, which becomes a part of that potential forest fire. I
    would not be able to sell any of these trees for renewable
    energy because they don't qualify under the standard. The only
    thing I could sell are the tops, the limbs, and the brush lying
    around. If these restrictions are in place in an attempt to
    protect the environment, if you ask me as a landowner, who has
    worked on the land for the last 20 some years, this will not
    have the effect.
        Instead, it has the effect of making it much more difficult
    to use the forest biomass as fuel stock and for renewable
    fuels, which could actually mean less environmental protection.
    The families do not have the income to stay on the land. They
    may be forced to sell their land to a developer or convert it
    to some other use, which obviously doesn't provide the
    environmental benefit.
        Mr. Chairman, I would also like to ask you to think about
    this. We invented the wheel a few thousand years ago. We have
    invented computers, but even with all those technological
    advances and so forth we still need viable, healthy,
    productive, and sustainable forests, and we also need a cash
    flow income.
        Thank you very much, Mr. Chairman and Members of the
    Committee. I urge you to fix this problem and allow the
    nation's family forest owners to help meet our nation's energy
    needs.
        I will be happy to answer any questions.
        [The prepared statement of Ms. Webster follows:]

        Prepared Statement of Anitra B. Webster, Owner, Family Forest,
             Lynchburg, VA; on Behalf of American Forest Foundation
        Mr. Chairman, Ranking Member Goodlatte, and Members of the
    Subcommittee, thank you for this opportunity to appear before you today
    to talk about the Renewable Fuel Standard and how it could impact
    family forest owners in my home State of Virginia and across the
    country.
        I'm here today representing the American Forest Foundation, home of
    the American Tree Farm System', a network of over 91,000
    family forest owners across the country who are committed to
    conservation. Many of you are probably familiar with ``Tree Farmers''
    in your state-family forest owners who typically own small tracts of
    forest, and manage it for wildlife, hunting, fishing, recreation, and
    timber production.
        My family forest is located near Lynchburg, Virginia, in Big
    Island, where I own and actively manage 390 acres. It started out as an
    old abandoned farm, but I've worked since 1985 to restore the land to a
    healthy forested state correcting bad forestry practices. As a
    participant in the American Tree Farm System', I manage my
    forest sustainably, under a management plan and certified by a third-
    party audit to be in compliance with nine standards of sustainability.
    I entered the Tree Farm System decades ago and in fact, was named the
    outstanding Tree Farmer of the year in Virginia in 1991.
        Now you're probably asking yourself: Why do family forest owners
    care about the Renewable Fuel Standard? Well it's pretty simple. Forest
    biomass can and should be an important source for renewable fuels. And
    right now we really need new markets, with the fall off in housing.
        Unfortunately, the Renewable Fuel Standard passed by Congress in
    2007 essentially left out the opportunity for family forests and other
    privately held forests to supply biomass for the production of
    renewable fuels. This is a serious concern for family forest owners,
    who are working hard every day to pay their taxes and maintain healthy
    forests.

        I am here today to urge you to fix the Standard to allow all
    sustainably produced forest biomass, from both planted forests and
    those that naturally regenerate.

        Without this change, even properties like mine, that are certified
    to meet international standards for sustainable forest management,
    could be unfairly excluded from an important emerging market, at a time
    when the forest products industry is at a 30 year low.
        With the change, Congress can keep healthy forests as forests,
    preserving their capacity to store carbon and provide clean water,
    wildlife, recreation and scenic values to their communities.
        Expanding the Standard in this manner is critically important in
    helping America to:

        (1) Strengthen a form of renewable energy that reduces greenhouse
            gases.

        (2) Meet our nation's renewable energy goals.

        (3) Encourage sustainable forest management on millions of private
            forests.

        (4) Create new markets for private forests.

        The only forest biomass considered ``renewable'' and allowed under
    the current Standard is that from ``actively managed tree plantations''
    that already exist or tops and limbs of trees, known as slash, and
    brush. By excluding biomass from naturally regenerated forests and
    planted forests that are not ``actively managed'', even if these
    forests are sustainably managed, family forest owners are precluded
    from effective participation.
    Impact on Family Forest Owners
        Let me give you an example on how the restrictive Standard impacts
    a family forest owner like me. I happen to have a 20-30 acre stand of
    white pine that I planted back in the late 1980's in abandoned fields
    (see Photo #1 attached). This stand is now growing to maturity and is
    just about ripe for thinning. Normally I'd have a logger come in and
    remove some of the smaller trees to make way for the other trees to
    grow larger. Thinning like this will also help enhance wildlife
    habitat. I have a lot of turkey, deer, and other wildlife.
        Here's the problem: under the current definition of renewable
    biomass, it's not clear whether my planted pine stands are considered
    ``actively managed tree plantations.'' If I were to talk about it
    myself, I don't think I would call it that, since I only do minor work
    to maintain it, and I don't use any pesticides or fertilizers.
        What's also unfortunate right now, if I want to do this thinning
    for both economic and ecological reasons, there's no market for the
    trees. So it's not economical to do the thinning the forest needs. A
    renewable energy market could help me recover cover the cost of doing
    these sorts of activities, so we can help improve the environment at a
    lower cost.
        There's a related problem--in terms of qualifying as forest
    biomass--with the other forest on the rest of my land. The rest of my
    forest, roughly 340 acres, is not a planted forest, but rather
    forestland that naturally regenerates and essentially grows on its own
    (see Photo #2). A number of years ago, I decided to do a ``shelterwood
    cut'' where I worked to remove a lot of the older trees, selling most
    for lumber, but leaving trees behind for seed production and shade, so
    new growth can develop. This is a way to regenerate forests and ensure
    that my natural forest comes back strong.
        While most of these trees will sell for lumber, not every tree is
    straight enough, so we either try to sell it for pulp or if there is no
    pulp market, we leave it in the forest. I would not be able to see any
    of these trees used for renewable energy because they don't qualify
    under the Standard. The only thing I could sell is the tops and the
    limbs and any brush lying around.
        Interestingly, there is a Dominion Power facility about 45 miles
    from my land and that plant does use wood chips to generate
    electricity. I know Congress is working on a Renewable Electricity
    Standard and is considering the same sorts of restrictions on the use
    of wood for electricity. Under this scenario, the facility could not
    get credit for the biomass from my forests. And I am left out of the
    market.
        This perverse result would occur with my similarly situated
    neighbors and colleague family forest owners across the country.
        Most of the forests in Virginia are naturally-regenerating forests,
    meaning they aren't typically planted but come back on their own. Under
    the Standard, the only materials that can be utilized for fuels from
    this type of forest are tops and limbs of trees.
    Improve the Practicality of the Standard
        The current Standard only allows trees from ``actively managed tree
    plantations'' that already exist to be counted. No one really knows
    what that term means, and frankly, because of the incredible variation
    across the country in how forests grow and are managed, I think it
    would be incredibly difficult to figure out what that means and enforce
    it.
        So if I plant trees in a stand that isn't actively managed, which
    is not well defined and could be very hard to interpret, I will only be
    able to sell a very small part of those planted trees for renewable
    fuel.
        Not only is this ambiguous and confusing--requiring a landowner to
    guess what's in and what's out--it will be tremendously difficult to
    determine whether a particular tree came from an active tree plantation
    or perhaps was just planted in my backyard at some point. On my
    property I have white pine stands that are planted and white pine
    stands that naturally regenerated. Once trees from these stands are
    harvested, they all look the same. They would all go to a log-yard,
    where they are aggregated for sale to the highest-value market.
    Tracking the planted tree and the natural tree, would be an impossible
    and costly feat.
        These kinds of restrictions are just not practical when considering
    the nature of the forest products supply chain and how harvesting
    occurs.
        We understand that the intention behind the language was to protect
    the environment and ensure that a renewable fuels market does not
    unintentionally trigger unsustainable harvesting. But this is the
    exactly wrong way to do it. Instead, it has the effect of making it
    much more difficult to even use forest biomass as a feedstock for
    renewable fuels.
        Cutting family forest owners out of markets can actually mean less
    environmental protection. If families do not have income to stay on the
    land, they may be forced to sell their land to a developer or convert
    it into some other use, that doesn't provide the same level of
    environmental benefit.
    Strengthen a Form of Renewable Energy that Reduces Greenhouse Gases
        Forest biomass is plentiful in the U.S., but its potential as a
    renewable energy source at a national level remains largely untapped.
    In fact, we have fifty percent more forest biomass today than we did in
    1950.
        This is a critical time for our nation as we begin the difficult
    transition to more of a carbon-neutral economy. Healthy forests will
    play a central role in any national climate change strategy because
    they capture and store carbon emissions from all sources. U.S. forests
    now sequester 10% of the total U.S. carbon emissions every year, and
    could do even more if policies are adopted that support forest
    management designed to maximize greenhouse gas reducing benefits.
        By redefining the Standard in a more practicable way that includes
    family forest owners, families will have an added incentive, and stream
    of revenue, that can help them stay on the land and continue managing
    their forest as a healthy forest.
    Meet Our Nation's Renewable Energy Goals
        Renewable energy standards now under consideration by Congress set
    forth a goal of meeting 25% or the nation's electricity demands from
    renewable sources of energy. But under the overly restrictive
    definition under consideration in these standards, only roughly 15% of
    the nation's available forest biomass resources could be used for
    electricity. The same is true for the Renewable Fuel Standard.
        Unless forest biomass from all sustainably managed forests is
    included in the Renewable Fuel Standard, we will miss a time-sensitive
    window for engaging family forest owners in the nation's transition to
    renewable sources of energy.
    Encourage Sustainable Forest Management on Millions of Private Forests
        As more and more private forests are converted to non-forests
    uses--at the rate of 1.5 million acres every year--Congress needs to
    support policies that encourage sustainable forest management. Since
    privately owned forests make up nearly \2/3\ of all forestland in the
    U.S., what each individual forest owner decides to do with his or her
    land can have a tremendous impact on the environment, wildlife, and
    forest-based communities.
        What do we mean by allowing all sustainable forest biomass to be
    included in the Renewable Fuel Standard? Sustainable forest management
    essentially means that the forest is managed in a way that protects
    both the environmental and economic potential from that forest. There
    are a variety of tools that landowners use to help them manage
    sustainably. Some are as simple as having a management plan in place
    that specifies both stewardship and economic objectives.
        Others are more complex, like forest certification, which involve a
    third-party audit to see if a forest is meeting specified environmental
    standards. Some states use mandatory or voluntary standards to ensure
    environmental protection.
        To participate in the American Tree Farm System, for example, my
    property is required to be inspected by a qualified forester and then
    certified that it is managed pursuant to a plan that protects the air,
    water, wildlife habitat and the forest's capacity to continue producing
    fiber products in the future. It must be re-inspected periodically to
    make sure the stewardship objectives continue to be met.
        Instead of taking the incredibly complicated and impractical
    approach of trying to manage forests in Federal legislation, Congress
    should rely on these existing tools to ensure sustainability and
    environmental protection.
    Create New Markets for Private Forests
        Including family forest owners in a revised Renewable Fuel Standard
    could also help them stay economically viable at a time when the forest
    and paper products industry has been depressed to the lowest levels in
    30 years. Making a living from timber alone has become increasingly
    difficult. These new markets can supplement, not replace existing
    forest products markets.
        Providing an additional income stream to struggling family forest
    owners, by allowing forest biomass from all sustainable sources to be
    included in the Standard, can help them stay on the land and maintain
    the forest in a healthy condition. We should not close these new and
    emerging renewable energy markets to those family forest owners who
    control the majority of forestland. Doing so severely limits the
    effectiveness of the Standard.
        Mr. Chairman and Committee Members, if we truly wish to meet the
    energy goals envisioned in the Renewable Fuel Standard legislation, it
    is essential that a more inclusive definition of sustainable forest
    biomass is adopted.

        We strongly believe Congress should correct the flaws in the 2007
    Renewable Fuel Standard by allowing all sustainable forest biomass to
    be considered ``renewable'' under the Standard. Additionally, as
    Congress considers a Renewable Electricity Standard, we must ensure
    that ALL sustainable forest biomass can to be used in the production of
    renewable electricity to help meet our nation's energy goals.

        Fixing the Standard will make it more practicable and accessible to
    millions of family forest owners like me. We urgently need this change
    in order to meet our nation's renewable energy goals, encourage
    sustainable forest management, and create new markets for family
    forests.
        Thank you again for this opportunity to testify.
        For additional information, contact:

    Rita Neznek,
    Vice President for Policy, American Forest Foundation,
    [Redacted].
    [GRAPHIC] [TIFF OMITTED] 51922.006

            Photo #1: Stand of White Pine, planted in late 80's that should
            be thinned to remove smaller trees, allow trees left to grow
            larger and healthier. Smaller trees like one in right corner of
            photo could be used for renewable fuels markets. However, this
            is a planted stand, but it is not clear whether this would be
            considered ``actively managed'' and therefore count as
            ``renewable.''
            [GRAPHIC] [TIFF OMITTED] 51922.007

            Photo #2: A mixed hardwood stand, growing naturally.
            Eventually, this stand will be thinned, removing some of the
            trees that are not growing straight or healthy, to make way for
            the healthy trees to grow. Under the current biomass
            definition, only the tops and limbs or ``slash'' of these
            thinned trees could be used

        The Chairman. Thank you, Ms. Webster.
        So the record indicates, we searched for a balance. Does
    anyone have any positive comments about EPA's proposal that was
    released yesterday? I know you haven't had a chance to review
    it.
        Mr. Feraci. They are moving forward with the process. The
    U.S. biodiesel industry right now, we find ourselves in a
    somewhat tenuous situation. We have had what I call a perfect
    storm of events that have come together that have made things
    extremely difficult for biofuels producers. The rule was
    supposed to be finalized and the program implemented January 1,
    2009. We are here in May of this year, and we are just seeing
    it now.
        So moving the program forward and getting it implemented is
    a concept that is a good thing. But, obviously, the assumptions
    that they have made, it is a mixed blessing because then you
    have the indirect land use assumptions that they have made. You
    give with one hand, take away with the other and you disqualify
    vegetable oil feedstocks from being used to produce fuel, and
    that is just going to have to be fixed in the process.
        The Chairman. Dr. Babcock, given a low level of accuracy in
    predicting the land use changes abroad, why do you think EPA
    chose to use the models that they did?
        Dr. Babcock. In my testimony I tried to differentiate
    between changes in land use due to the changes in production
    versus where the land is going to come from. So if you need
    more cropland, where is that land going to come from? Is it
    going to come from increased double-cropping? Is it going to
    come from pasture? Is it going to come from forests?
        That last link in these linked models is where the direct
    weakness is. I think I agree with Dr. Glauber on that, and the
    reason why they did what they did is because, and she referred
    to the Wind Rock model, that is what they had. So if they had
    an objective of trying to estimate land use changes, they went
    to where they could find someone that had some capability of
    doing it, and so that is why they did it.
        The Chairman. Thank you. Mr. Pechart, you did a great job
    of explaining the problems that we face in Pennsylvania trying
    to participate in biofuels and definitions really hurting us.
    But, I wish you would elaborate, particularly for our
    environmental friends, the abandoned mine problem that we have
    in Pennsylvania, and you mentioned the Chesapeake Watershed,
    and we also affect the Delaware Watershed and the Allegheny
    Watershed because of anthracite coal being mined in the
    Northeast and bituminous in the Southwest. If you could just
    elaborate on the problem and if we were able to plant
    feedstocks, switchgrass on these abandoned mines, what it would
    mean environmentally.
        Mr. Pechart. Thank you, Mr. Chairman, and that is a very
    good question. Some interesting statistics. In the eastern
    United States there are 740,000 acres of abandoned mine lands
    right now. It is an incredible number. And, just in
    Pennsylvania alone, we have 180,000 acres of abandoned mine
    lands. That is 2 billion tons of waste coal sitting around
    Pennsylvania, impacting about 4,600 miles of streams.
        For Pennsylvania to clean that up it would cost us $10
    billion, and that is $10 billion we obviously don't have in
    this economy right now. That is $15,000 to $20,000 an acre. We
    have a public-private partnership right now going on and groups
    working to correct this problem, and I will give a good example
    that shows the economic impact of this.
        The state spent $32 million to clean up about 960 acres of
    abandoned mine lands. Companies, utilities which are using
    fluidized bed technology and burning coal cleanly, and also
    restoring abandoned mine lands and planting feedstock crops on
    them that could be used to fuel cellulosic ethanol plants, at
    some point cleaned up 4,500 acres of abandoned mine lands at no
    cost to taxpayers. They used their own private dollars to do
    that.
        So there is a tremendous effort underway in Pennsylvania.
    Feedstocks are going to be part of that. It is going to be a
    huge economic development tool for the communities where all of
    these acres of abandoned mine lands are. And the standard as
    presently proposed would limit the ability or the incentive for
    those utilities that are looking to take the next step in clean
    coal, which is reclaiming the land and producing next
    generation biofuels crops on there from doing so.
        The Chairman. Thank you.
        The chair recognizes the Ranking Member, Mr. Goodlatte.
        Mr. Goodlatte. Thank you, Mr. Chairman.
        Ms. Webster, welcome, and I would like to ask you and Mr.
    Pechart a question about all of these conflicting and ambiguous
    definitions of what is acceptable for use as woody biomass, and
    whether you think that that has inhibited investment in
    renewable energy from wood products.
        Ms. Webster. I certainly think it is going to inhibit the
    investment. As we spoke about in my testimony, I have trees
    that have been planted, but according to the definition if they
    were not planted for woody biomass, can they be used for woody
    biomass? And to try and keep track of one tree from another
    tree as to whether or not it was planted or was not planted,
    when it actually hits the lumberyard, how are they going to
    know that this tree was or was not.
        I think it is an extraordinarily complicated, unnecessarily
    complicated structure.
        Mr. Goodlatte. And when people are thinking about spending
    a significant amount of money to promote woody biomass, they
    are going to worry that they could get into all kinds of
    regulatory problems and may say, well, I will invest in
    something else rather than that.
        Ms. Webster. Precisely. Precisely.
        Mr. Goodlatte. Mr. Pechart, are you familiar with the
    proposed biomass definition in the Waxman-Markey Climate Change
    Bill?
        Mr. Pechart. No, I am not, sir.
        Mr. Goodlatte. Well, I would call your attention to it,
    because it will even further compound the problem that we are
    experiencing with EPA, with the situation we have been talking
    about today, and with the energy bill that we passed 2 years
    ago that had this change made at the last minute in the
    definition of what qualified for biomass.
        Some advocates for the current RFS biomass definition have
    argued that the current definition prevents over-harvesting of
    trees and other feedstocks. Do you believe that it is possible
    the definition has the opposite effect and could potentially
    encourage over-harvesting on the land where it is currently
    allowed?
        That is directed to you, Mr. Pechart.
        Mr. Pechart. I don't think so. As I had indicated in my
    testimony, at one time in Pennsylvania we had a very viable
    paper manufacturing industry, and we were pulling tremendous
    amounts of material. We have one of the largest hardwood stands
    in the United States in Pennsylvania. We were pulling a lot of
    material out of there, but when the paper mill industry started
    to decline, that material was just left in the woods, and it
    remains there today.
        So I don't think right now, and to reference your earlier
    question, I think the segue is very good. The hardwoods
    industry in Pennsylvania right now is just sort of scratching
    their heads, and they are not sure where the future lies. They
    know they have a great resource that is out in their woods. We
    are encouraging them to look at--you need to sort of bring back
    that infrastructure that you once had in place that took all
    that stuff out of the woods and took it to the paper mills.
    That industry has gone away, too, but they are just sort of
    cautious about where this is going to go, and this proposed
    regulation from EPA is not helping them answer a lot of those
    questions right now.
        Mr. Goodlatte. So you would agree with me that the effect
    of discouraging harvesting woody biomass on lands where it is
    prohibited under these convoluted regulations would have the
    opposite affect of putting too much pressure----
        Mr. Pechart. Yes.
        Mr. Goodlatte.--on the lands where it is allowed?
        Mr. Pechart. Yes.
        Mr. Goodlatte. Very good.
        Ms. Webster, what systems and protections do you have in
    place as a landowner to ensure that you are managing your
    forest so that future generations can have the same benefits
    from the forest as you have?
        Ms. Webster. Well, to begin with I have management plans. I
    am involved, as I said, with the tree farms systems. So there
    is a whole set of criteria that make me continue to be a
    certified tree farmer. I have the Department of Forestry in
    Virginia which has best management practices, so any kind of
    cutting and so forth are all regulated and are watched.
        Third, I have, aside from the state regulations, I have a
    plan for the next generation, my kids. This is a family
    operation, so they are already on deck and come to meetings
    with me to be educated about forest management.
        Mr. Goodlatte. Well, thank you, and I hope you are able to
    instill that in your future generations of your family so they
    will continue to do that work and provide----
        Ms. Webster. Absolutely.
        Mr. Goodlatte.--jobs in our Congressional district.
        Ms. Webster. Absolutely.
        Mr. Goodlatte. It is very important, and we appreciate your
    contribution today.
        Mr. Chairman, if I might ask one more question of Mr.
    Pechart. Some groups hail the renewable biomass restrictions in
    the RFS saying that these restrictions help protect forests and
    wildlife habitat. Do you agree with that statement?
        Mr. Pechart. We don't agree with that statement in
    Pennsylvania. Again, a lot of our economy depends upon the
    hardwoods industry. We have a massive amount of state and
    Federal forestlands that create jobs, that put people to work.
    We really believe that the next generation, the next economy in
    Pennsylvania is going to focused around renewable energy,
    whether that is in agriculture or in hardwoods or in the forest
    products industry. And a lot of that is going to deal with
    biomass and getting biomass out of the woods and creating
    energy with it.
        Mr. Goodlatte. Well-managed forests are renewable resource
    for our country, and if you do that, you can have a beneficial
    aspect of protecting the forests. If they overgrow, that is a
    major contributor to problems with insect and disease----
        Mr. Pechart. That is correct.
        Mr. Goodlatte.--infestation, along with forest fires. And
    forest fires getting out of control and being wildfires that
    destroy the forest rather than the natural type of a forest
    fire that can have a regenerative process in the forest.
        So they need to be thinned, and we ought to put the
    thinning to work with biomass and in the process we can improve
    the forest and improve the wildlife habitat in my opinion.
        Thank you both for your contribution. I don't mean to
    exclude the other four. I hope some of the other folks will
    have questions for them because my time has run out.
        The Chairman. The chair thanks the Ranking Member. The
    gentleman from Iowa.
        Mr. King. Thank you, Mr. Chairman. I just want to tell you
    that I have breathed a sigh of relief each time I listen to
    each one of you give your testimony. My blood pressure has come
    down considerably since the first panel.
        And I don't know which one of you I appreciate the most,
    but I appreciate all of your testimony here today. I wanted to
    point out to Mr. Bowdish that the plant that you hail from is
    not only one that we have done some work on, I personally laid
    a fair amount of that storm drain underneath that. I didn't
    just direct that it be done. I mean, actual hands on. So I know
    exactly where you are and how that thing is built from the
    cornstalks on up.
        And you represent a company that is a huge part of the
    number one renewable fuels producing Congressional district in
    America when you add ethanol, biodiesel, and wind together. I
    have never done the math with ethanol and biodiesel, but I
    think that would also be true. We have been number one in
    biodiesel production for quite some time now. I should probably
    stop my commercials and get to some facts here.
        First, Dr. Babcock, as I reviewed your testimony I was
    trying to do a calculation so that I could come to some
    understanding of your center's model that predicts 300,000
    acres would be used per billion gallons of ethanol. And so I
    just do a little scratching, and it looks to me like we could
    probably do that in Iowa for less, fewer acres. And from this
    evaluation, and I went at it the other way, and I just took a
    base of 500 gallons per acre that we can do, and that is pretty
    easily done and did the math on that, and I think I came to
    150,000 acres.
        Anyway, on this math how does that work out, and does it
    have a presumption of an average yield per acre? And then does
    that extrapolate across a lot of complicated factors as I
    understood you? Can you help me understand that model?
        Dr. Babcock. Yes. So what happens is: say you need a
    billion gallons more ethanol, well, you will get more corn
    produced to meet that, but in getting more corn produced you
    are probably taking the land from some other crop somewhere
    else. And so there are all the cross-crop effects, and so the
    net effect of acreage--corn is one of the most productive crops
    around in terms of productivity per acre. If it is pushing out
    another crop that has less production per acre, you have to
    take that into account to get a net acreage affect.
        Mr. King. But when you calculate it, do you have a base
    number that makes a presumption on an annual yield? I am just
    thinking about the difference between Iowa yields and yields
    that you might get at another place that is not the Corn Belt.
    How does that actually extrapolate down through? Do they get to
    the point where on the other end of this equation, at almost
    the other end of the table, but I am actually thinking Brazil.
    And I am trying to put this equation together in my mind about
    we can sequester, I believe, more carbon by raising corn than
    you can by old-growth forests, which we should utilize. But, it
    seems to me that the EPA is thinking in terms of charging
    against corn production the burning of old-growth forests in
    Brazil, and at the same time we are in discussion about how we
    are going to convert timber waste to cellulosic ethanol.
        So when you take that equation down to Brazil and say,
    ``Okay, if we can turn it into ethanol here, we can do it there
    if they are going to clear the trees.'' Wouldn't we either make
    houses out of them or turn it into cellulosic ethanol? And
    wouldn't we put that all in our big spreadsheet, our inter-
    relational database so that we can do this math and really
    calculate out something that we can look at and have confidence
    that all the numbers balance?
        Dr. Babcock. I will just briefly respond to that because
    there are many, many, many, many spreadsheets that are involved
    because you have many spreadsheets for each country involved.
    If you take 20 million acres of land in the United States, good
    corn land, divert it to fuel production, it will have ripple
    effects as I have heard it described throughout. You have
    identified many issues that need to be taken into account. What
    proportion of Brazil, if there is any change in Brazilian
    forests, what proportion of the wood is used in durable
    housing, for example? And I don't think we fully understand
    that.
        Mr. King. And I appreciate that, and we are only talking
    about a small part of the driving factor behind this, which is
    the idea of global warming itself or climate change itself. And
    so I would just ask this general question to the panel if
    anyone chooses to answer it in my seconds that remain, is there
    any witness on the panel that has analyzed the science that
    lays behind this global warming model that drives this policy
    we are talking about? And if so, do you agree with their
    conclusion that the Earth is getting warmer because we are
    burning fuel into the atmosphere?
        Anyone care to tackle that?
        I would then, Mr. Chairman, let the record show that there
    was no one who volunteered to tackle that question which
    underlies this entire hearing, and I appreciate all the
    witnesses and by the way, the gentleman from Massachusetts, it
    has been awhile since I agreed so much with someone from
    Massachusetts.
        I yield back.
        Mr. Goodlatte. I am from Massachusetts.
        Mr. King. Boy, I am totally embarrassed now, because I do
    agree with Mr. Goodlatte almost every time unless we have a
    regional issue that has to do with agriculture. So I appreciate
    it, Mr. Chairman and Ranking Member. This has been a very good
    hearing, and I am glad I was here to be a part of it.
        The Chairman. The chair thanks the witnesses. Under the
    rules of the Committee the record of today's hearing will
    remain open for 10 calendar days to receive additional material
    and supplementary written responses from the witnesses to any
    question posed by a Member.
        This hearing of the Subcommittee on Conservation, Credit,
    Energy, and Research is adjourned.
        [Whereupon, at 2:00 p.m., the Subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]
     Submitted Joint Statement of Hon. John H. Hoeven III, Governor, State
      of North Dakota; Chairman, Governors' Biofuels Coalition; and Hon.
      Chester J. ``Chet'' Culver, Governor, State of Iowa; Vice Chairman,
                         Governors' Biofuels Coalition
        Mr. Chairman and Members of the Subcommittee, as Chair and Vice
    Chair of the Governors' Biofuels Coalition, Governor Chet Culver and I
    are pleased to submit this testimony on behalf of the Coalition. We
    appreciate the Subcommittee providing us with an opportunity to offer a
    state perspective on indirect land-use change and the environmental and
    economic benefits of ethanol, biodiesel, and other biofuels.
        As governors, we have witnessed first hand the benefits that
    biofuels and other renewable resources provide to our states and much
    of the Midwest. Once economically suffering rural communities have been
    revived by the ability of our farms and biorefineries to deliver green
    jobs to our region and clean domestic fuels to all consumers--even as
    the nation's energy experts work toward additional oil alternatives for
    the future.
        The decisive action taken by Congress in support of biofuels in
    2005 and 2007 with the establishment and expansion of the Renewable
    Fuel Standard set a new benchmark for the United States. In less than 5
    years, we have built a multi-billion dollar nationwide infrastructure
    that will soon deliver ten percent of the nation's light duty
    transportation fuel, and biodiesel use for heavy duty vehicles, from
    renewable domestic resources at a competitive price. At the same time,
    despite what biofuels critics say, the nation's farmers are also able
    to provide all the corn we need for domestic and export purposes,
    including the 80 percent of the corn crop that is used as animal feed.
        The debate over how much corn is required for conventional ethanol
    production and the perceived impact this use has on international land-
    use change stems from misunderstandings and misinformation about modern
    farming and ethanol production processes. Ethanol production allows the
    same corn to be used for ethanol and livestock feed. The negative media
    of the past 2 years neglects to note that only the starch from the
    kernel of corn is used in ethanol refining. The protein, oils, and
    minerals are all captured and concentrated, and returned to farmers for
    use in livestock rations and emerging value added food products.
    Similarly, in the production of biodiesel from soybeans or other
    oilseeds, only the oil is utilized for the fuel, the remaining meal is
    a high value livestock feed that is rich in protein.
        Last year, ethanol and biodiesel production returned over 23
    million metric tons of livestock feed derived from the ethanol and
    biodiesel refining processes at a cost to livestock producers lower
    than the unprocessed grain they normally buy. This fact is critical in
    providing policy makers the information they need as they consider the
    impact of biofuels feedstock demand growth and the issue of indirect
    land-use change. The use of corn and oilseeds for fuel in no way
    represents a one-for-one disappearance of food from the system, and a
    growing chorus of scientific evidence shows that the U.S. grain based
    biofuels industry is not responsible for changes in international land-
    use.
        To illustrate this point, I would like to cite the analysis of Dr.
    Terry Klopfenstein of the University of Nebraska. Dr. Klopfenstein's
    well-documented work shows that the industry standard conversion in a
    dry mill ethanol plant is 2.8 gallons of ethanol for every bushel of
    corn. In 2015, the Renewable Fuel Standard of 15 billion gallons will
    require 5.4 billion bushels of corn. Of this, the equivalent of 2.3
    billion bushels will return to the feed market; netting a 2.8 billion
    bushel corn consumption for the production of ethanol. With this
    consideration, the total net use of corn for ethanol in 2015 leaves
    more corn available for food, feed and industrial uses than there was
    in 2002.
        Such analyses make for hard-to-sell headlines, but they are the
    facts, and we need to set the record straight for consumers and policy
    makers. As a start, the Coalition recommends that the U.S. Department
    of Agriculture report on corn for ethanol use on an adjusted basis to
    reflect the use of distillers' grains as a high-value replacement for
    bulk corn in the animal feed category. Similarly, adjustments should be
    considered for biodiesel and soybean meal.
        The Coalition's concerns about the complexity of indirect land-use
    change are shared by many in the scientific community. More than 100
    scientists wrote to the State of California last year outlining the
    scientific and public policy problems with defining and enforcing
    indirect land-use in a selective (i.e., biofuels only) way. These
    scientists pointed out that most modeling outcomes, by definition,
    assume little innovation. These models could not have predicted the 500
    percent increase in corn yields per acre since 1940, the tripling of
    wheat yields since 1960, or the 700 percent increase in yield that can
    occur if farmers in developing countries adopt higher yield seed
    varieties and more efficient farming practices. Encouraging such
    advances in the developing world should be a priority for foreign
    policy decision makers.
        In addition, policy makers should consider that corn ethanol is a
    critical foundation in the transition to the next generation of
    biofuels. As research and development of feedstocks and technologies
    for cellulosic ethanol and other advanced biofuels continue to evolve,
    the potential for future land-use demands can diminish even as biofuels
    production grows.
        There is no question that global food demand, increasing amounts of
    meat in the diets of citizens of developing nations, and deforestation
    are serious challenges for a growing world. Future fuels of all types
    must be incentivized carefully. At issue with indirect land-use change
    in the context of biofuels is a lack of data and a lack of appropriate
    modeling tools to assess impacts. Further, there have been no serious
    discussions of international treaties that should be used to cover a
    range of industrial and suburban development policies that have
    documentable impacts on forest and farm land destruction in the United
    States and abroad.
        The governors recognize these are complex and time sensitive
    issues, and recently recommended to the President that an interagency
    task force be established on lifecycle greenhouse gas emissions and
    transportation fuels. This high-level task force would include the U.S.
    Department of Agriculture, U.S. Environmental Protection Agency, and
    U.S. Department of Energy, and would be charged with helping to resolve
    the debate over the lifecycle greenhouse gas emissions of biofuels and
    petroleum by requiring a thorough, objective assessment of this issue.
    This process should include an annual update of the lifecycle analysis
    of the drilling, refining and transport of petroleum products as well
    as the indirect emissions associated with military protection of access
    to world oil supplies.
        The U.S. agricultural system and modern ethanol production has
    managed to meet demands for both ethanol and livestock feed. In doing
    so, many in the farm community and biofuels industry have taken serious
    steps to reduce fossil energy inputs, invest in more efficient
    production technologies, and adopt innovative tilling practices. The
    result of these efforts is impressive. For example, a number of
    scientific experts recently wrote in a letter to Secretary Vilsack that
    modern, highly efficient ethanol plants built since 2005 account for 75
    percent of U.S. ethanol production, and that these plants require \1/
    10\ of the water needed to produce a like amount of gasoline from crude
    oil.
        In our states, we see documented decreasing fertilizer inputs per
    bushel of corn produced, biotech advances that allow production
    agriculture to feed more people for less money, and a desire by farmers
    and refiners to do even more. Without the advances achieved by these
    industries, urban life and a quality environment could not exist as we
    know it.
        To be sure, the biofuels and agricultural industries have much to
    do to achieve greater levels of environmental sustainability, as do
    nearly all sectors of the American economy. To address this issue in a
    more constructive manner, the Coalition recently recommended to the
    President that the U.S. Department of Agriculture take the lead in
    bringing together biofuels industry representatives; environmentalists;
    state agricultural, energy, and environmental experts; and others to
    explore immediate policy options to achieve continuing improvement in
    energy water use efficiency, reduced fertilizer use, better tilling
    practices, improved water quality, and conservation of wildlife
    habitats. The governors intend this action to produce pragmatic,
    immediate steps that will improve the sustainability of biofuels and
    other agricultural products over the long term.
        It is the Coalition's goal to continue to work with renewable fuel
    producers, farmers, environmental interests, and others to enhance
    biofuels productivity, efficiency, and sustainability. We look forward
    to working with Congress and the President to provide a pathway to a
    cleaner and more sustainable--economically and environmentally--
    transportation fuel future for our states and the nation.
                                     ______

       Submitted Statement of William E. Flederbach, Jr., Executive Vice
                  President, ClimeCo; on Behalf of PetroAlgae
        Thank you Chairman Holden, Ranking Member Goodlatte, and Members of
    the Subcommittee for this opportunity to submit a statement for the
    record. My name is William Flederbach, Jr., Executive Vice President of
    ClimeCo and I am submitting this statement for the record on behalf of
    PetroAlgae.
        PetroAlgae is a renewable fuel company commercializing the next
    generation technologies to grow and harvest oil and high protein feed
    from micro-crops. Micro-crops include algae, micro-angiosperms,
    cyanobacter, diatoms, and other very small aquatic organisms which grow
    very quickly and thus produce much more biomass per acre per day than
    conventional terrestrial macro-crops can. Very high productivity per
    unit of land area, combined with high yields of both fuel and edible
    proteins, makes PetroAlgae's micro-crop-based process a renewable,
    carbon-neutral, food-contributing, cost-effective substitute for
    petroleum-based fuels. PetroAlgae uses naturally selected strains of
    micro-crops to produce rapid growth and high fuel yield. The process
    can be engineered on a massive commercial scale, creating the
    opportunity to produce a cost effective alternative to fossil fuels and
    high-protein animal feed while absorbing CO2 from green
    house gas emissions (GHG). Expecting to begin commercial deployment in
    2009 and opening a commercial scale pilot facility later this year,
    PetroAlgae is engaging with licensing prospects throughout the world.
    PetroAlgae offers a path to sustainable and clean energy independence
    through a process that is scalable globally.
        PetroAlgae's process of growing and harvesting micro-crops for
    feedstock for petroleum products actively reduces CO2. This
    can be achieved without the need to store the captured CO2.
    Micro-crops are carbon neutral in that they capture more CO2
    from the atmosphere than that which is released when the biofuel is
    ultimately consumed.
    Micro-Crop Global Benefits
        Micro-crops have always been a critical component in the overall
    atmospheric CO2 balance and serve as a negative feedback
    mechanism to the melt of icebergs. When icebergs melt, surface level
    albedo decreases. Albedo is found in ice and in clouds and acts to
    reflect shortwave radiation from the sun, thus decreasing the amount of
    long wave radiation emitted from the Earth (heat). However, when ocean
    surfaces increase, the amount of photosynthetic micro-crop also
    increases, acting as a negative bias to the impact of iceberg melt. The
    tiny photosynthetic micro-crops are an important food source in the
    Arctic marine ecosystem. They also absorb carbon dioxide from the
    atmosphere. As sea ice shrinks from warming, the micro-crops could play
    an important role in slowing climate change. The micro-crop process is
    very similar to the naturally occurring absorption process and serves
    to effectively absorb CO2 from both the atmosphere and
    eventually from dedicated point sources of CO2 (coal
    utilities and more).
    CO2 Emission in the United States
        In the most recent Annual GHG Inventory report published by the
    United States Environmental Protection Agency (Agency, April 2009),
    total CO2 emissions from fossil fuel combustion reached a
    staggering 5,736 million tons in 2007, up from 5,635 million tons in
    2006. This category includes fossil fuel combustion in electricity
    generation, transportation, and industrial, residential, commercial use
    in the U.S. and its territories. A further breakdown of this data is
    discussed below.
        In 2007 CO2 emissions from fossil fuel combustion for
    electricity generation increased to over 2,397 million tons per year,
    up from 2,237 million tons in 2006. The release of CO2 from
    the use of fossil fuels in industry (cement, steel, and others) also
    increased to over 845 million tons, up from 844 million tons in 2006.
    The upward trend is clear, as is the need for alternative
    CO2 abatement technologies.
    Current CO2 Reduction Approaches--Electricity Generation and
            Industrial
        In the past, the majority of CO2 abatement technologies
    in the electricity and industrial fossil fuel arenas have focused on
    carbon capture, both pre-combustion and post-combustion.
    Post Combustion CO2 Capture
        Carbon dioxide capture is most commonly based on chemical
    absorption, where the flue gas is brought into contact with a chemical
    absorbent with an ability to attach the CO2. Typical
    absorbents are amines and carbonates.
        The scrubber column is designed to ensure the exhaust gas and the
    absorbent are brought into close contact with each other. The
    CO2 is then transferred from the flue gas to the absorbent,
    and there are two out-going flows from the scrubber column; a cleaned
    gas-stream with low CO2 content and liquid-stream containing
    water, absorbent and CO2.
        After the absorption process, the absorbent and the CO2
    are separated in a regeneration column. When heated, the absorbents'
    ability to retain CO2 is reduced, resulting in regeneration
    of the absorbent, which can then be re-used. The CO2 leaves
    the regeneration column as a gas stream of high CO2 purity.
    This gas can be transported to a CO2 storage site or micro-
    crop farm. Approximately 80 to 90 percent of the CO2 from a
    power plant can typically be removed by post-combustion CO2
    capture.
        A major stumbling block hindering capture of CO2
    produced by fossil fuel combustion has been the extra cost and energy
    penalty associated with using the most common chemical scrubber
    absorbers. Employing the scrubbers in the power plants may reduce net
    power output by approximately \1/3\ and raise the cost of electricity
    produced by 60-80%. Currently, the Electric Power Research Institute
    (EPRI) is evaluating alternative processes to reduce the loss of power
    and limit the increase in electricity costs. (EPRI, 2006)
    Pre-Combustion CO2 Capture
        Additionally, CO2 can be separated from the fossil fuel
    before combustion. The principle of this process is first to convert
    the fossil fuel into CO2 and hydrogen gas (H2).
    Then, the H2 and the CO2 is separated in the same
    way as under post-combustion, however a smaller installation can be
    used. This results in a hydrogen-rich gas which can be used in power
    plants or as fuel in vehicles. The combustion of hydrogen does not lead
    to any creation of CO2.
        The pre-combustion CO2 capture is applicable to new coal
    power plants. There has been significant focus on the integrated coal
    Gasification Combined Cycle (IGCC) technology, where the power is
    produced from combined hydrogen combustion and from a steam turbine.
    Pre-combustion CO2 capture is also applicable for natural
    gas power.
        By pre-combustion CO2 capture about 90 percent of the
    CO2 from a power plant can be removed. As the technology
    requires significant modifications of the power plant, it is only
    viable for new power plants, not for existing plants.
    Current Status of CO2 Capture
        As of today, no power plants or industrial sources with
    CO2 capture have been realized. The reasons being are the
    significant financial risk associated with technological investments
    and lack of infrastructure for capture, transportation and storage.
    (International Energy Agency (IEA), 2007).
    PetroAlgae Alternative
        Although there are some additional new and novel technologies being
    explored such as membrane filters, adsorption and chemical looping, all
    of these remain very costly and full of inherent process risks.
        PetroAlgae's process serves as a very viable alternative to the
    often controversial storage of the captured carbon from scrubbing and
    other technologies previously reviewed. Although micro-crop farms will
    absorb ambient concentrations of CO2, micro-crop farms will
    likely be located adjacent to CO2 producing facilities, like
    power plants, resulting in potentially significant CO2
    sequestration benefits.
        Production of alternative transportation fuels from micro-crops
    will help reduce the amount of CO2 in the environment
    without the need to store the captured CO2. Micro-crops
    provide a carbon-neutral fuel because they consume more CO2
    than is ultimately released into the atmosphere when micro-crop-based
    fuel burns. The amount of carbon removed from the environment will
    depend on the number of micro-crop farms built and the efficiency with
    which micro-crops can be modified to convert CO2 to fuel
    products.
    Distinct Advantages Over Other CO2 Capture and Storage
            Techniques
        Much of the world's oil and gas is made up of ancient micro-crop
    deposits. Today, the micro-crop technology will produce ``new oil''
    through a cost-effective, high-speed manufacturing process. This
    endless supply of new oil can be used for many products such as diesel,
    gasoline, jet fuel, plastics and solvents without the global warming
    effects of petroleum.
        Other bio-fuel feedstock such as corn and sugarcane often destroy
    vital farmlands and rainforests, disrupt global food supplies and
    create new environmental problems. The micro-crop technology is
    targeted at fundamentally changing our source of oil without disrupting
    the environment or food supplies. Instead of drilling for old oil,
    PetroAlgae can now manufacture clean, new oil, anytime and anywhere,
    delivering a revolutionary breakthrough to the world.
        In addition, the absorption of CO2 in micro-crops is a
    distinct advantage over the capture and storage of CO2 in
    abandoned mine sites and other geological formations around the Earth.
    The liability issue for carbon capture and storage (CCS) can be framed
    in terms of operational liability and post injection liability.
    Operational liability includes the environmental, health and safety
    risks associated with CO2 capture, transport and injection.
        There are two types of post injection liability: the in situ
    liability of harm to human health, the environment, and property, and
    the climate liability related to leakage of CO2 from
    geological reservoirs and the effect on climate change. In general,
    post injection liabilities pose a unique set of challenges because of
    the scale of proposed CO2 storage activities, the long
    timeframe over which the risks may manifest themselves, and the
    uncertainties of the geophysical systems. (Mark de Figueiredo et al.,
    2004)
        Although the micro-crop process will have a small impact the
    operational liability associated with the capture of CO2, it
    will greatly improve the risks associated with post injection
    liability. The captured CO2 will be beneficially reused in
    the growth of the micro-crop and its end use of a biofuel, thus
    converting a liability into an asset.
    Conclusion
        PetroAlgae systems are designed to make money as fuel and food
    producers, so they have the potential to change CO2 capture
    from a dead-weight-cost process to a profit-making process. We are not
    aware of any other CO2 capture technology that has the
    potential to be a money-maker instead of a money-loser at large scale.
    The benefits of PetroAlgae's process are extensive and needs the
    support of the U.S. Government to accelerate the technology design and
    full-scale implementation.
                                     ______

      Submitted Statement of Dennis Griesing, Vice President, Government
                    Affairs, Soap and Detergent Association
        The Soap and Detergent Association (SDA) is an over 100 member
    national trade association representing the formulators of soaps,
    detergents, general household cleaning products, industrial/
    institutional cleaners as well as the companies that supply ingredients
    and packaging to the formulators, including the oleochemical industry.
    Oleochemicals: The Original Green Chemical Industry
        The oleochemical industry is the original ``green chemical''
    industry. For over 100 years in the United States, the industry has
    turned ``animal fats'' into fatty acids, fatty alcohols and other
    biobased chemicals that are widely used to manufacture soaps,
    detergents, personal care products, paper, plastics and tires.
        The interrelationship of oleochemicals and biofuels is based on
    their shared ``animal fats'' feedstocks, e.g., tallow, white grease and
    yellow grease and brown grease. While the United States oleochemical
    industry is principally based on tallow, other fats and greases are
    also used.
        Since biodiesel and renewable diesel can also be made from ``animal
    fats,'' government programs which subsidize or force a demand for
    animal fats-based fuels, e.g., biodiesel tax credits, the alternative
    fuel credit and the Renewable Fuel Standard (RFS), put the oleochemical
    industry at an extreme economic disadvantage. This green industry
    should be applauded by government, but instead Federal biofuel policies
    have persistently threatened its continued viability as a domestic
    industry. If this material is lost to the industry, the logical
    replacement for tallow is palm oil.
        The consequence of this is that all products would likely be made
    offshore and imported to the United States. Not only would oleochemical
    producers be put out of business but impacted consumer product
    manufacturing could be sent offshore as well. And, since palm oil
    production results in deforestation, the ILUC issue would simply be
    sent offshore as well.
        Or, the oleochemical companies, in order to stay in business, could
    turn to petroleum-based substitutes. Either outcome would be profoundly
    ironic if it resulted from renewable fuels policies.
    Indirect land Use Changes (ILUC) Impact on Oleochemicals
        SDA is concerned that the inclusion of ILUC calculations at this
    point in time will disqualify plant-based renewable and biodiesel for
    purposes of the new Renewable Fuel Standard (RFS2). The consequence of
    this will be to drive producers of biomass-based diesel and biodiesel
    to animal fats as a feedstock with the result that the oleochemical
    industry will lose its critical raw material base because it will be
    consumed by biofuels.
        The animal fats pool is insufficient to meet the RFS2 target for
    biodiesels in any event. So, even after it was all drawn off from the
    oleochemical market, the standard would still not be met.
        Moreover, the supply of animal fats is inelastic; livestock
    production is geared to food supply, not fuel. No one is going to
    increase herd size for biofuels production. Animal fats are a co-
    product of livestock slaughter, not a demand driver. Consequently,
    there is no rational prospect that production will increase
    significantly. Annual production has been essentially flat for several
    years.
        Animal fats-based diesels, whether biodiesel or renewable diesel,
    also pose challenges for cold weather use. At lower temperatures, there
    are so-called ``cloud point'' issues with such fuels which result in
    clogged fuel filters and lines. Reducing these can be overcome to some
    degree by processing or putting special heaters and on trucks. All of
    this, however, adds costs. As a result, animal fats-based diesel is
    generally considered seasonal.
        In SDA's view, disqualification of plant-based fuels under the RFS2
    will effectively undermine the program. It will, de facto, create a
    non-expandable, seasonal RFS animal fats-based diesel program. The
    vision of the RFS2 simply cannot be realized without plant-based
    products leading the way into the future. Moreover, again, it stands to
    severely damage or eliminate the domestic oleochemical industry.
        Based on the materials which SDA has reviewed, the science
    underpinning ILUC calculations is unsettled and evolving. If the
    outcome of incorporating ILUC considerations with respect to RFS2 is,
    as many anticipate, a disqualification of plant-based green diesels,
    both the RFS2 program will be threatened and the domestic oleochemical
    industry will see its raw material pool disappear when green diesel
    producers turn to animal fats, despite their significant limitations.
    SDA would submit that both these consequences ought to be avoided as a
    matter of energy policy and national interest.
    Renewable Biomass Provisions
        SDA's concerns with the renewable biomass provisions have
    principally to do with the definition of ``renewable biomass'' which
    includes ``Animal waste material and animal byproducts.''
        Animal byproducts, e.g., the tallows and greases noted above, have
    long, well established markets in oleochemicals as well as pet foods
    and other applications. While in general, all the other stipulated
    constituents of ``renewable biomass'' are either expandable crops or
    genuine waste products without pre-existing markets; animal-fats are
    traded as commodities, have a recognized economic value and are a
    critical raw material for an existing industry. Neither are they
    wastes: the price per barrel for tallow is similar to and at times
    higher priced than a barrel of crude oil. SDA believes that
    reconsideration of their inclusion ought to be undertaken. They ought
    not to be included in this definition.
        A precedent for such consideration is found at Section 932(a)(C)(i)
    of the ``Energy Policy Act of 2005.'' In defining biomass derived from
    ``forest-related'' materials the phrase ``. . . or otherwise non-
    merchantable material'' is applied. The clear implication of this is
    that material which otherwise has a market is excluded from the
    definition. SDA would respectfully urge that similar language be
    included in the current ``renewable biomass'' definition.
    Summary
        It is essential that the potential benefits of renewable fuels not
    be purchased at the cost of the continued viability of other
    industries. From SDA's perspective, our national energy policy with
    respect to renewable fuels is facing an unintended train wreck caused
    by a confluence of well intentioned and laudable goals. SDA believes
    that it is essential that we stand back and reassess the energy policy
    landscape.
                Respectfully submitted,

    Dennis Griesing,
    Vice President, Government Affairs,
    [Redacted].
                                     ______

              Submitted Statement of American Soybean Association
        The American Soybean Association (ASA) thanks the Subcommittee for
    holding this hearing to examine the impact of indirect land use and
    renewable biomass provisions in the expanded Renewable Fuel Standard
    (RFS2).
    Importance of Biodiesel
        ASA has a great interest in the development and implementation of
    the RFS2, especially for biodiesel. Biodiesel is the cleanest burning
    biofuel currently used in commercial markets. Biodiesel is a renewable
    and sustainable energy source that can play a significant role in our
    national efforts to increase our energy security and improve our
    environmental footprint. Biodiesel has also provided a significant
    market opportunity for U.S. soybean farmers and jobs and economic
    development for rural communities. These facts make it difficult to
    understand why soy biodiesel would be excluded from the RFS2.
        Biodiesel production in the United States has predominantly
    utilized soybean oil as a feedstock. While other feedstocks are
    becoming more viable, soybean oil remains the primary feedstock of
    choice for U.S. biodiesel production. As a result, biodiesel has
    provided a significant market opportunity for U.S. soybean producers by
    increasing demand for soy oil. Soybeans are produced primarily for the
    soy meal that is used in the feed and food market. Historically, there
    have been surplus stocks of soy oil that have resulted in depressed
    prices for soybeans and restricted markets for soybean farmers.
        The biodiesel industry is creating valuable green jobs and making a
    positive contribution to the economy. In 2008 alone, the U.S. biodiesel
    industry supported over 51,000 jobs, added over $4 billion to the
    nation's Gross Domestic Product (GDP) and generated over $866 million
    in tax revenue for Federal, state and local governments.
        Despite the many benefits it provides, the U.S. biodiesel industry
    is facing severe economic hardship today. The difficulty accessing
    operating capital as a result of the current credit crisis, the
    volatility in commodity markets, reduced demand, and inability to
    compete in the European marketplace are making it difficult for
    producers to sell their fuel. In addition, uncertainty over Federal
    policy, such as the extension of the biodiesel tax credit and the
    implementation of the RFS2, is undermining investor confidence in the
    industry.
        The National Biodiesel Board (NBB) estimates that absent any change
    in Federal policy, U.S. biodiesel production will likely fall to 300
    million gallons in 2009, which would cost the U.S. economy more than
    29,000 jobs. If prolonged, this downturn will lead to a severe
    retraction in U.S. biodiesel production capacity.
    Renewable Fuel Standard (RFS2)
        ASA believes that an expanded RFS2 that includes a specific minimum
    use requirement for biomass-based diesel is a necessary and beneficial
    program. The RFS2 is necessary to move the country toward our goals of
    energy independence and clean, renewable energy production. As the
    current market demonstrates, the production and use of biofuels is not
    economically viable when petroleum prices are low. Coupled with the
    extension of the biodiesel tax credit, the RFS2 could provide some
    much-needed market certainty for U.S. biodiesel production.
        Under the Energy Independence and Security Act (EISA) of 2007, to
    be eligible for the new RFS2, biodiesel must meet a 50% greenhouse gas
    (GHG) reduction relative to petroleum diesel. When calculating the
    lifecycle GHG impact of biofuels, the statute directs EPA to consider
    direct and indirect emissions, including indirect land use, of all
    stages of the fuel and feedstock production. As a point of reference,
    under the existing GREET model used by the U.S. Environmental
    Protection Agency (EPA) and the U.S. Department of Energy, biodiesel
    achieves a 78% GHG reduction relative to petroleum diesel. The primary
    area of concern and disagreement has emerged over the international
    indirect land use assumptions that EPA has proposed to use in
    conducting their updated lifecycle GHG analysis.
    Indirect Land Use
        Indirect Land Use Change (ILUC) refers to the GHG emissions caused
    by land converted to crop production globally. While we have not had
    time to fully assess the EPA Proposed Rule on RFS2 implementation, our
    initial review suggests that it is significantly flawed, and it does
    unnecessary harm to the competitive position of the U.S. soy biodiesel
    industry. EPA has included, in the proposed rule, numbers on the
    lifecycle greenhouse gas emissions of soy oil biodiesel that are
    derived from faulty assumptions, flawed analysis, and misplaced
    penalties.
    Flaws in EPA Assumptions
        We see numerous potential flaws in the approach EPA is using for
    indirect land use changes in its proposed rule. Further, there are
    numerous factors that we believe refute the possibility that
    significant international indirect land use change would result from
    the relatively small increase in U.S. biodiesel production called for
    under the RFS2:

        1. The method used by EPA to measure indirect land use is new and
            untested. There is neither consensus in the scientific
            community nor a widely accepted methodology that could be
            deemed credible to accurately calculate the impact of U.S.
            biofuels production on international land use decisions.

        2. Land use change has been going on around the world for many
            years, long before biodiesel was produced in the U.S. The EPA
            analysis uses land converted to cropland from 2001-2004 and
            extrapolates that into the future. Since there was very little
            U.S. soy biodiesel produced from 2001-2004, it is unclear how
            EPA justifies attributing future land conversion to soy
            biodiesel. Other market factors (urbanization, world population
            growth and dietary changes, timber and hardwood prices, etc.)
            impact and drive land use change decisions. In a recent
            interview Paulo Adario, director of Greenpeace's Amazon
            deforestation campaign said, ``Biodiesel demand for soy oil is
            not seen as a significant driver of Amazon deforestation. Most
            of the soya grown in Brazil, including what is grown on illegal
            plantations, is for animal and human consumption; and right
            now, the Brazilian government is investing in other feedstocks
            for the development of its biofuels program.'' \1\ Clearly soy
            biodiesel is not driving land use change and any land use
            change that is occurring certainly cannot be solely attributed
            to U.S. biofuels.
    ---------------------------------------------------------------------------
        \1\ Nicholas Zeman, ``Greenpeace: Biodiesel Not Seen as Significant
    Driver in Amazon Deforestation'' Biodiesel Magazine,  May 4, 2009.

        3. Other market factors, including input and transportation costs,
    ---------------------------------------------------------------------------
            determine to what use farmers will put their land.

        4. As an example, if Brazilian land use change is a key factor,
            then past and recent trends in Brazilian soy planted area
            should be a telling data point. In fact, Brazilian soy area
            increased most significantly in years prior to the existence of
            U.S. biodiesel production. In the last 5 years, when U.S.
            biodiesel production has increased exponentially, Brazilian soy
            area has remained relatively flat.

        5. Yield increases by U.S. soybean farmers will play a significant
            role in meeting biofuel feedstock demand by producing more
            soybeans on the same amount of land. Historical data tell us
            that productivity gains and yield increases occur for U.S.
            agriculture. Over the 25 year period from 1981-2006, U.S.
            soybean farmers increased their yield from 30 bushels per acre
            to 43 bushels per acre. This equates to an average yield
            increase of \1/2\ bushel per acre per year. This represents the
            minimum productivity increase that is likely to occur. With
            technologies currently in development, the yield increases
            going forward are expected to surpass those we have achieved
            over the past 25 years. U.S. seed technology companies are
            projecting that current soybean yields will double by 2030.

        6. An increase of 300 million gallons of biodiesel (from 700
            million to 1.0 billion gallons) under the RFS2 should not
            result in the substantial land use ``penalty'' being ascribed
            to U.S. soy biodiesel by EPA. From a starting point of 78% GHG
            reductions under the GREET model, any reasonable land use
            ``penalty'' that might be justifiably attributed to U.S. soy
            biodiesel should certainly not result in pushing soy biodiesel
            below the 50% GHG reduction threshold required under the
            statute.

        7. Other measures are being implemented to address land use change
            for certain sensitive areas, such as the Amazon region in
            Brazil. An example is the Soy Moratorium, a pact signed by
            multinational soybean trading companies, Non-Governmental
            Organizations (such as Greenpeace and The Nature Conservancy),
            and the Brazilian Ministry of Environment which restricts the
            marketing or purchasing of soybeans from any newly deforested
            areas in the Amazon. The trading companies that signed onto the
            moratorium account for 95% of the soybeans marketed from the
            primary soybean growing region of Brazil.

        8. We question whether the indirect emissions of diesel (the
            baseline against which biodiesel is being measured) are
            adequately factored into the baseline.

        9. The statute does not require EPA to include international
            indirect emissions in their lifecycle analysis for biofuels.
            There appears to be a far greater degree of confidence among
            the scientific community in the ability to measure ILUC that
            may or may not occur in the United States as a result of
            biofuel demand. Extending the ILUC analysis globally creates
            far more uncertainty. Since the EISA statute only requires that
            EPA measure, ``. . . the aggregate quantity of greenhouse gas
            emissions (including direct emissions and significant indirect
            emissions such as significant emissions from land use changes),
            as determined by the Administrator,'' we do not believe that an
            EPA lifecycle analysis that attempts to measure international
            ILUC would be necessary or appropriate at this time.
    Intent of Congress
        It was not the intent of Congress for soy biodiesel to be excluded
    from the RFS2. If soy biodiesel is excluded, the biomass-based diesel
    schedule under RFS2 cannot be achieved. There are simply not enough of
    other biodiesel feedstocks to produce the amount of biodiesel called
    for in the RFS2. This is a clear indication that Congress did not
    intend to exclude soy biodiesel from the RFS2. The 50% GHG level that
    biodiesel must meet to qualify for the RFS2 is arbitrary. The GHG
    thresholds were established at different levels for different fuels and
    existing ethanol plants were exempted from the GHG threshold
    altogether.
    Conclusion
        ASA has a great interest in the development and implementation of
    the RFS2, especially for biodiesel. Soy biodiesel is one of the
    cleanest burning biofuels in commercial existence today. It is a
    renewable and sustainable energy source that can play a significant
    role in our national efforts to increase our energy security and
    improve our environmental footprint. Biodiesel has also provided a
    significant market opportunity for U.S. soybean farmers and jobs and
    economic development for rural communities.
        The approach EPA is using for their proposed rule on RFS2
    implementation appears to be significantly flawed and would do
    unnecessary harm to the competitive position of the U.S. soy biodiesel
    industry.
        Again, ASA thanks the Subcommittee for holding this hearing to
    examine the impact of indirect land use and renewable biomass
    provisions in the RFS.
                                   Attachment
    American Soybean Association
    Indirect Land Use & the Renewable Fuel Standard (RFS2)
    Talking Points
       EPA's proposed rule inaccurately attributes significant
            international land use change to soy biodiesel production in
            the U.S.

       A lot of factors, such as urbanization, population
            increases, dietary changes, market economics, hardwood prices,
            etc. go into land use changes.

       U.S. biofuels do not drive international land use decisions
            and certainly cannot be singled out for responsibility for all
            land use changes.

       If soy biodiesel is excluded, the biomass-based diesel
            schedule under RFS2 cannot be achieved.

       It was not the intent of Congress for soy biodiesel to be
            excluded. They would not have set the schedule at levels that
            can only be met if soy biodiesel is included.

       The 50% GHG level that biodiesel must meet is arbitrary.
            Existing ethanol plants are exempt and do not have to meet any
            GHG reduction threshold.

       The statute does not require EPA to include international
            indirect emissions in their lifecycle analysis for biofuels.

       There is neither consensus in the scientific community nor a
            widely accepted methodology that could be deemed credible to
            accurately calculate the impact of U.S. biofuels production on
            international land use decisions.

       Under the EPA Proposed Rule, the only existing biofuel
            excluded from the RFS2 would be soy biodiesel, which is one of
            the cleanest biofuels in existence.
                                     ______

           Submitted Statement of Biotechnology Industry Organization
        The Biotechnology Industry Organization (BIO) is pleased to provide
    this written testimony on the critically important topics of the impact
    of indirect land use and the renewable biomass provisions in the
    renewable fuel standard (RFS). BIO thanks the Committee for its
    continuing leadership in agriculture and advanced biofuels.
        BIO is the world's largest biotechnology organization, with more
    than 1,200 member companies worldwide. BIO represents leading
    technology companies in the production of conventional and advanced
    biofuels and other sustainable solutions to energy and climate change.
    BIO also represents the leaders in developing new crop technologies for
    food, feed, fiber, and fuel.
        BIO supports efforts to reduce the carbon intensity of
    transportation fuels and believes that biofuels can and must contribute
    significantly to this important objective. Climate change is an urgent
    global issue, and Congress is to be commended for its leadership in
    addressing the contribution of transportation fuels to greenhouse gas
    emissions (``GHGs''). The growth of biofuel production can be done the
    wrong way or it can be done the right way. The advanced biofuels
    community supports building this industry in the most responsible and
    sustainable way possible.
        On the issue of the renewable biomass definition in the RFS, BIO
    believes that the successful evolution of the biofuels industry towards
    next generation technologies will depend critically on the availability
    of sustainable sources of cellulosic biomass and other advanced
    feedstocks throughout the country. Any unnecessary restrictions on the
    eligibility of advanced feedstocks under the RFS are likely to hamper
    the deployment of these next generation technologies. BIO urges
    Congress and the responsible agencies to ensure that all feedstocks
    that can be produced and harvested sustainably are made eligible for
    the biofuels mandates of the RFS.
        On the issue of indirect land use change (``ILUC''), BIO recognizes
    that land use is an important component of climate and that possible
    ILUC impacts of biofuels production should be examined. However,
    current ILUC modeling is incapable of providing reliable indirect
    emissions estimates at this time. Modeling indirect global land use
    effects is a very complex undertaking. While direct impacts of
    production are relatively certain and traceable to the production,
    transportation and combustion of biofuels, indirect impacts are
    affected by a vast array of market and policy particulars and no model
    currently exists to accurately assess these factors. We do believe,
    however, that new and better models will be available in the near
    future.
        There is currently no standardized modeling methodology or agreed
    data input for ILUC modeling. No ILUC model today comes close to
    capturing the interplay of economic, institutional, technological,
    cultural and demographic variables inherent in quantifying the indirect
    impact of a given fuel in an international setting. In fact, the
    economic equilibrium models being used by EPA in their proposed rule
    for the lifecycle analysis of GHG emissions from renewable fuels as
    required by the Energy and Independence Security Act of 2007 (EISA)
    were not designed for regulatory use--i.e., to assign specific
    compliance metrics to specific fuels. Minor changes in any number of
    assumptions about biofuel production, agricultural economics, or land
    use policy can dramatically affect the outcome of current ILUC models.
    While EPA is making every effort to produce a capable model, the simple
    fact that they are having to link together several separate models that
    were all designed for different purposes suggests how embryonic the
    model development process is.
        For example, in the proposed rulemaking, EPA has used the Global
    Trade Analysis Project (GTAP) model to test the robustness of the
    FASOM, FAPRI and Winrock results. GTAP is a multi-region, multi-sector,
    computable general equilibrium model that estimates changes in world
    agricultural production, which is housed in the Department of
    Agricultural Economics at Purdue University. The GTAP model seeks to
    project international land use change based on the economics of land
    conversion and the relative land use values of cropland, forest, and
    pastureland. BIO believes there are many factors ignored in the GTAP
    modeling of indirect land use changes. Chief among these are the many
    factors driving conversion of land in less developed countries. Poverty
    and efforts to escape poverty are a leading cause of land-use change.
    Uses of marginal land in less developed countries are changing rapidly
    due to factors other than biofuel production in the United States and
    other industrialized nations. Productivity of farm land in less
    developed countries may rise sharply, reducing the demand for land
    conversion attributable to lost food stocks from biofuel production in
    the United States. The list of relevant factors goes on and on. Set
    against this complexity is a simplistic conversion rate built into the
    GTAP model. This parameter is neither validated nor capable of
    validation with available world-wide macroeconomic and land use data.
    Thus, at its core the GTAP model is plagued by ``needless
    uncertainty.''
        A paper published by the National Academy of Sciences in 2007 found
    that the complex factors that drive land use change globally ``tend to
    be difficult to connect empirically to land outcomes, typically owing
    to the number and complexity of the linkages involved.''  \1\ In a
    compendium of papers from a conference of 75 leading scientists in
    September 2008, under the auspices of the SCOPE workshop in Germany,
    the leading paper on land-use change concludes that ``assessment of the
    GHG implications of land use and land conversion to biofuel crops is a
    very complex and contentious issue. A complete assessment of the GHG
    implications would require an accounting [of numerous international
    activities for which] the present assessment is limited due to the lack
    of data required to address all of these issues.'' \2\ Thus, the best
    scientific assessment of indirect land-use change is that currently
    available global economic models are not robust, and that parameters
    and output calculations cannot be validated with available data. The
    accuracy of any values produced by such a modeling exercise, and thus
    whether the indirect land use effects rise to the ``significant'' level
    stipulated in the legislation for consideration, is therefore seriously
    under question.
    ---------------------------------------------------------------------------
        \1\ Turner et al., 2007 [obtain report for page citation].
        \2\ Proceedings of the Scientific Community on Problems of the
    Environment (SCOPE), Ch. 6, p. 112-13 (2009). [insert title of article]
    ---------------------------------------------------------------------------
        Indirect land use assessment in relation to lifecycle GHGs has
    profound implications not just for biofuels, but potentially for all
    agricultural activity, and arguably climate policy the world over.
    First, by applying ILUC penalties to biofuels, effectively U.S.
    businesses are assuming responsibility for land use decisions--and the
    resulting carbon emissions--of individuals and nations around the
    world. This is a serious policy decision that could well set a
    precedent for all areas of economic activity, and would serve as
    potential validation of the position of China and other nations who
    seek to shift the responsibility for at least a portion of their
    domestic carbon emissions to the U.S. and other developed nations.
        Second, if ILUC penalties are applied to biofuel feedstock
    producers, these penalties should arguably be applied to all
    agricultural producers and other land users. If this is the direction
    Congress and others seek to pursue, we needs to approach this radical
    shift in regulatory policy very carefully, and with the greatest
    possible flexibility, to minimize economic harm and other unintended
    consequences.
        Thus, it is critical that any such regulations are approached with
    the utmost care, open-mindedness, and flexibility. To deliver the
    maximum real GHG reductions, the computation of lifecycle GHG profiles
    must: (1) follow consistent applied and thoroughly vetted methodology;
    (2) be based on contemporary and complete data; and (3) account for and
    encourage a range of future technology advances to ensure continued
    reductions in the carbon intensity of the country's fuel mix.
        The role of land use in GHG sequestration and emissions is a
    serious climate change issue, which should be addressed in a
    comprehensive and consistent way in state, Federal and, indeed,
    international climate change policies and programs. As the
    representative of the biotechnology community, BIO expects to be an
    active supporter of and participant in programs designed to reduce GHG
    emissions attributable to land use and to increase permanent GHG
    sequestration through improved land management practices. We believe
    that a rigorous scientific and economic analysis of ILUC effects of
    biofuels production will demonstrate that first and next generation
    biofuels produced in the U.S. make a positive contribution to reducing
    the carbon intensity of transportation fuels and overall GHG emissions.
    It is critical that at this early juncture for state, Federal and
    international regulation of GHGs and carbon, regulatory agencies should
    develop a rigorous and consistent scientific approach to identifying
    and measuring GHG effects of indirect land use change attributable to a
    variety of activities, including the production of alternative fuels.
        The critical question is whether the ILUC methodology and
    calculations are sufficiently rigorous and robust at this time. BIO
    submits the answer to this question is, emphatically: No. The peer
    reviewer comments from the California Air Resources Board (CARB) low
    carbon fuel standard review confirm that, at this time, ILUC
    calculations lack the requisite scientific rigor to support their
    incorporation into law. One peer reviewer underscored that the science
    and ``art'' of ILUC modeling and methodology is ``in its infancy.'' \3\
    Another peer reviewer concluded that ILUC methodology exhibits an
    unacceptably large range of uncertainty, far exceeding the uncertainty
    associated with all of the other modeling relied upon in the Staff
    Report.\4\ A third peer reviewer concluded that ``the values used to
    quantify the carbon intensity due to land use change for ethanol from
    corn and sugarcane are not yet sufficiently developed to be
    scientifically confirmed; refinement and validation of those quantities
    is needed.'' \5\
    ---------------------------------------------------------------------------
        \3\ Peer review comments of J. Reilly, Review of Proposed
    Regulation to Implement the Low Carbon Fuel Standard, April 6, 2009,
    (``Reilly comments'') at 5 (``The indirect emissions issue . . . is a
    very new area where research that could establish with confidence such
    indirect emissions is in its infancy.'').
        \4\ Peer review comments of L. Marr, Scientific Review of the
    CARB's Proposal to Implement the Low Carbon Fuel Standard, Mar. 31,
    2009, at 2 (``The largest uncertainties in the estimation of carbon
    intensities are associated with the indirect effects. Relatively
    speaking the magnitude of direct effects are much more certain.'').
        \5\ Peer review comments of V. Thomas, Review of Proposed
    Regulation to Implement the Low Carbon Fuel Standard, posted to
    website, Apr. 14, 2009 at 3.
    ---------------------------------------------------------------------------
        BIO submitted the following recommendations to CARB at its public
    hearing on April 23, 2009, to postpone incorporation of ILUC modeling
    or calculations in final regulations:

        1. The Board should direct its staff to continue soliciting input
    from all stakeholders and from the scientific community on appropriate
    ILUC modeling and reliable data sources, without any fixed commitment
    to GTAP or the parameters used in GTAP.

        2. The Board should coordinate this further review of ILUC modeling
    with EPA's process for developing sounder science to support its
    rulemaking on the GHG emissions associated with different alternative
    fuels. Coordination with European regulatory processes studying ILUC
    should also be pursued.

        3. The Board should expect this process to take as much as 2 years,
    after which it will again publish a staff report and proposed
    regulations and transmit the report for peer review. This next time,
    peer reviews should be completed and posted for public comment before
    the public comment period on the proposed regulations begins.

        4. During the up-to 3 year period in which ILUC methodologies will
    not be finalized in California, the LCFS regulations could remain
    otherwise in effect, without any ILUC penalty for biofuels. This period
    of future scientific study and a subsequent rulemaking proceeding
    should be recognized for what it is--a transition period and not a
    permanent elimination of ILUC penalties. During this transition period,
    the Board could authorize the publication of best estimates of carbon
    intensity values for different pathways, with and without tentative
    ILUC values indicated by the current state of scientific modeling of
    ILUC.

        5. The Board should establish as its legal standard for adopting
    ILUC methodology and calculations the development of an economically
    and scientifically robust, consensus model that is capable of
    validation by meaningful real-world data that would result in tolerable
    ranges of uncertainty. Until there is much greater consensus concerning
    the modeling and calculation of ILUC, the Board should refrain from
    incorporating even best estimates of ILUC impacts in final regulations.

        6. If, using scientifically rigorous models or analysis, Staff
    determines that certain biofuel pathways will have a net ILUC benefit,
    i.e., they will sequester more carbon than they emit through land-use
    change, the Board should consider early adoption of regulations that
    lock-in these net benefits for these ``best technologies.'' The early
    recognition of these net benefits of ``best technologies'' should drive
    the evolution of the biofuels industry towards such technologies.
    Later, after the requisite period for scientific studies, the Board can
    consider adoption of final regulations that fix ILUC penalties for
    ``lagging technologies.''

        7. The Board should consider adopting ILUC mitigation rules that
    will allow producers of technologies with significant ILUC penalties to
    reduce the amount of those penalties through verifiable investments in
    (i) activities that improve land use efficiency, (ii) research for
    lifecycle efficiencies, including biorefinery energy and co-product
    efficiencies and (iii) and other activities that secure direct carbon
    intensity benefits in the California or national economy.

        BIO believes that CARB's adoption of these measures will allow it
    to implement the LCFS and to secure substantial carbon intensity
    savings from the use of transportation fuels in California, without
    imposing insufficiently justified ILUC penalties only on biofuels. BIO
    believes that EPA should take a similarly measured approach.
        Investments in first generation biofuels are catalyzing efficiency
    across the entire agricultural sector. These efficiency gains have the
    potential to greatly lessen demand pressure on land, and, thus, to
    reduce GHG emissions from undesired land conversion. The proposed ILUC
    penalties for first generation corn-based ethanol threaten the industry
    with a substantial competitive disadvantage relative to all other
    fuels. Resulting reductions in investment in first generation
    technologies will, in turn, threaten recently realized agricultural
    efficiency gains, and will discourage investments in allied
    technologies--such as advanced fractionation, cold fermentation, and
    renewable repowering--that could further improve the direct GHG profile
    of biorefineries, while increasing production of food, feed and other
    co-products from the same acre of land.
        Premature regulatory implementation of ILUC methodology and
    calculations will also chill investment in second generation biofuels.
    Even though cellulosic ethanol is indicated to have a lesser ILUC
    penalty than corn-based ethanol, the penalty is still substantial.
    Moreover, adoption of immature ILUC methodology would signal to
    potential investors in the fledgling industry that penalties of
    uncertain validity are likely to be imposed on cellulosic ethanol, and
    not on other alternative fuels. We understand that Congress wants to
    take a lead role in spurring alternative transportation fuels, and,
    more generally, in reducing GHG emissions across the country and the
    world. However, by incorporating immature ILUC methodology for biofuels
    the U.S. will be out of step with regulatory efforts internationally--
    where the European Parliament recently decided to postpone inclusion of
    ILUC in biofuel regulations, pending completion of an expected 2 year
    study of the complex methodology. BIO suggests to not lock in ILUC
    methodology, but to continue serious scientific studies aimed at
    improving modeling, securing reliable data, and resolving
    uncertainties. Such studies would be most usefully undertaken in
    conjunction with EPA's analyses of ILUC, which will also afford
    opportunity to share information with European and other nations
    studying the same issue.
        ILUC methodology should also be coordinated with policies being
    undertaken at all governmental levels to improve agricultural practices
    (yields, sustainability of marginal lands, GHG sequestration from
    changed practices, such as no tilling, etc.) and to reduce pressures
    for deforestation and conversion of sensitive lands in at risk
    countries. With land and forestry practices sensibly managed, increased
    biofuel production world-wide should not result in substantial net
    carbon emissions attributable to land use conversion in at risk
    countries.
        In closing, the successful development of a myriad of
    biotechnologies and their rapid deployment throughout the economy can
    advance the nation's goals of both sharply reducing greenhouse gas
    emissions and encouraging cleaner and more sustainable energy
    resources. Biofuels, using the most advanced science, can significantly
    reduce U.S. GHG emissions compared to petroleum based gasoline and new
    biotechnology developments such as improved enzymes and high-yielding
    drought-tolerant crops are rapidly improving the GHG profile of both
    traditional and advanced biofuels. BIO thanks the Committee for its
    support of advanced biofuels, and for its consideration of these
    comments.
                                     ______

              Submitted Statement of Society of American Foresters
        On behalf of the Society of American Foresters (SAF), the national
    scientific and educational organization representing the forestry
    profession in the United States with over 14,000 members, please accept
    the following testimony for the hearing record on the Renewable Fuel
    Standard (RFS) held May 6, 2009.
        As an organization chartered to advance the science, education,
    technology, and practice of forestry for the benefit of society, the
    SAF believes that woody biomass energy from our nation's forests is
    part of the solution to supplying America with reliable renewable
    energy. As the House is aware, it is distressing that at a time when
    considerable efforts are being made to address global climate change--
    by preventing the conversion of forests to competing uses and by
    mitigating the likelihood of increasingly devastating wildfires--the
    definition of ``biomass'' in a Federal RFS needlessly limits the
    management options available to Federal land managers, and diminishes
    the market incentives available to private forestland owners that allow
    them to resist development pressures and maintain their land as
    forests. We commend the House Agriculture Committee's efforts to craft
    a more scientifically, socially, and ecologically appropriate
    definition, which can help balance the nation's most pressing forest
    management needs and safeguard the important environmental and societal
    values our forestlands provide.
        SAF supports strategies and policies that promote the development
    of economically and environmentally viable forest biomass energy
    production together with those that assist communities, forest owners,
    public forest managers, and local entrepreneurs in accomplishing urgent
    wildfire prevention and forest health improvement projects. This
    includes appropriately defining ``woody biomass'' in any Federal
    legislation.
        Increased utilization of forest biomass will also help combat
    global climate change and improve the nation's energy security by
    providing an abundant, renewable fuel resource as a substitute for
    imported fossil fuels. On public lands in the West, many of the
    silvicultural treatments prescribed to reduce the risk of catastrophic
    wildfire and improve forest health will generate large volumes of
    forest biomass. Increased utilization of forest biomass can improve
    forest conditions in the eastern and southern states as well, where
    additional markets for low-quality and small-diameter trees also will
    enable forest managers to improve forest health. On other forests, both
    public and private and across the country, forest health and
    restoration treatments are needed to control insects and disease and to
    improve wildlife habitat and watersheds. This type of management can be
    costly, as much of the biomass removed has little to no value. An
    appropriately structured RFS would help to create a market for woody
    biomass. This, in turn, would encourage much-needed forest health or
    fuels reduction projects by offsetting the some of the cost of biomass
    removal. The current RFS, with its restrictive, one-size-fits-all
    definition, encourages the opposite.
        Concern for the sustainability of biomass power generation has led
    to a prescriptive, process-based approach. The 2007 Energy Bill's RFS
    definition of ``renewable biomass'' is prescriptive and restrictive.
    Although this method may give some interested parties a level of
    comfort, it is a disservice to our nation's forests and has no basis in
    science. Forests are complex, diverse, and in constant flux as a result
    of natural and man-made disturbances. No two acres are alike and, as
    such, no two acres should be treated alike. Thus, such a prescriptive
    definition serves as a disincentive to restore forest health in many
    areas, because Federal requirements are too onerous and, in some cases,
    even contradict necessary silvicultural treatments.
        Alternatively, an outcome based approach, with a broader definition
    of ``renewable biomass'', would give flexibility to manage forestland
    sustainably. Ideally, on private land, this would be done with the
    assistance of a professional forester who writes a management plan or
    harvest plan that addresses soil conservation, water quality, wildlife
    habitat, and biodiversity. This approach would allow management
    decisions to be site specific and unique to the needs and goals of a
    particular forest. It also would serve as a powerful incentive for
    landowners to consult with professional foresters to promote best
    management principles, and to allow management efforts to adapt to
    changes in the landscape or as new science and management techniques
    become available (i.e., adapting climate change or other disturbances).
        In regard to public lands, the SAF believes the laws and
    regulations that preceded the 2007 Energy Bill, such as the National
    Environmental Policy Act (NEPA), National Forest Management Act (NFMA),
    and the Federal Land Policy and Management Act (FLPMA), more than
    adequately provided requirements for the sustainability of biomass
    removal. Past biomass definitions have excluded areas such as
    Wilderness, Wilderness Study Areas, and inventoried Roadless areas.
    These definitions, too, although politically popular, make little sense
    from a forestry perspective. Some of these areas, for example, are in
    need of habitat restoration, insects and disease containment, or fuels
    reduction projects, which could maintain the character of these special
    designations while simultaneously improving forest health. Land
    managers in the Forest Service and Bureau of Land Management should
    decide what projects are needed and where. The biomass from these
    projects should count toward an RFS that helps offset the cost of
    removal and stretch appropriated dollars toward the further enhancement
    of public lands.
        Our forest resources are renewable. Although some biomass may be
    removed from public or private land, it will inevitably grow back and
    likely need to be removed again. There are roughly 20 billion board
    feet of new growth and 10 billion board feet of mortality on our
    national forests every year. In contrast, there are (on average) 2
    billion board feet of removals. As we discuss the sustainability of
    biomass, which is imperative, we cannot forget that we are losing
    ground in our efforts to restore public forests. We also must remember
    that creating a viable biomass market through an RFS will help protect
    private forestlands from development and safeguard the environmental
    and economic benefits on which we all depend.
                                     ______

           Submitted Statement of National Alliance of Forest Owners
    I. Introduction
        The National Alliance of Forest Owners (NAFO) is pleased to submit
    comments to the House Committee on Agriculture regarding the ``impact
    of the indirect land use and renewable biomass provisions in the
    renewable fuel standard (RFS)''. NAFO is an organization of private
    forest owners committed to promoting Federal policies that protect the
    economic and environmental values of privately-owned forests at the
    national level. NAFO membership encompasses more than 74 million acres
    of private forestland in 47 states. NAFO members are well positioned to
    help our nation meets its renewable energy objectives, and NAFO is
    prepared to work with the Committee and Congress toward that end.
        Private working forests are a fundamental part of the strategic
    natural resources infrastructure of our nation, producing renewable,
    recyclable and reusable wood and paper products, sustaining plants and
    wildlife, producing clean water and air and providing recreation
    experiences. Working forests also play a substantial role in helping
    this country achieve energy independence while reducing greenhouse gas
    (GHG) emissions. Forest biomass is a renewable energy feedstock that
    can help meet our national renewable energy goals in all regions of the
    country, if placed on a level playing field with other renewable energy
    sources.
        NAFO asks this Committee to recognize biomass from private, working
    forests as an eligible feedstock on an even playing field with other
    renewable energy sources as it reviews the Federal RFS. The RFS should
    recognize that forest owners already work within a well established
    framework of laws, regulations and non-regulatory programs and actions
    that promote and maintain responsible forest management, and will
    continue to do so as they help our nation meet its renewable energy
    objectives.
    II. Working forests will help our nation meet its objectives to
            increase our reliance on secure, domestic sources of renewable
            energy and help reduce atmospheric greenhouse gas (GHG)
            concentrations.
        Experts have long recognized working forests as a source of real
    and verifiable reductions in greenhouse gases and a cost-effective
    source of industrial GHG offsets. The United Nations' 2007
    Intergovernmental Panel on Climate Change (IPCC) highlights forest
    management as a primary tool to reduce GHG emissions. The IPCC states
    that, ``In the long term, a sustainable forest management strategy
    aimed at maintaining or increasing forest stocks, while producing an
    annual sustained yield of timber, fiber or energy from the forest, will
    generate the greatest mitigation benefit.'' \1\
    ---------------------------------------------------------------------------
        \1\ Climate Change 2007: Mitigation. Contribution of Working Group
    III to the Fourth Assessment Report of the Intergovernmental Panel on
    Climate Change [B. Metz, O.R. Davidson, P.R. Bosch, R. Dave, L.A. Meyer
    (eds.)], Cambridge University Press, Cambridge, United Kingdom and New
    York, NY, USA, page 543.
    ---------------------------------------------------------------------------
        However, a Federal RFS that does not appropriately include all
    forms of forest biomass not only limits our country's ability to
    produce cost-effective renewable fuels, it significantly limits the
    carbon benefits associated with using fuels derived from such biomass
    in regions of the country where forests are the dominant land use.
        Appropriately including forest biomass in an RFS would take full
    advantage of these carbon mitigation benefits in the energy context.
    Likewise, a policy that discourages forest biomass utilization will
    forfeit these benefits.
    III. Definitions of eligible biomass feedstock should put working
            forests on an even playing field with other renewable energy
            sources.
        NAFO has particular concern about the definition of eligible forest
    biomass found in the Energy Independence and Security Act of 2007
    (EISA). Definitions of qualifying renewable energy feedstocks should
    provide a level playing field for market access across all feedstock
    sources and encompass the full range of forest biomass, including trees
    and other plants, forest residues (e.g., tops, branches, bark, etc.)
    and byproducts of manufacturing (e.g., sawdust, bark, chips, dissolved
    wood retrieved from the papermaking process, etc.). Presently there are
    at least four different definitions of qualifying forest biomass in
    Federal statute.\2\ This adds complexity and confusion to project
    developers, biomass producers and Federal program administrators who
    are required to determine how the various, and at times conflicting,
    definitions interact with one another.
    ---------------------------------------------------------------------------
        \2\ Separate definitions of eligible forest biomass can be found in
    Section 45(c)(3) of the Internal Revenue Code (26 U.S.C. 45(c)(3));
    Section 203(b)(1) of the Energy Policy Act of 2005 (42 U.S.C.
    15852(b)); Section 201(1)(I) of the Energy Independence and Security
    Act of 2007 (42 U.S.C. 7545(o)(1)(I)); and Section 9001(13) of the
    Food, Conservation, and Energy Act of 2008 (7 U.S.C. 8101(12)).
    ---------------------------------------------------------------------------
        As currently written, the EISA RFS definition places confusing
    parameters on significant acreages of private forestlands in the form
    of land use restrictions. These restrictions limit the ability of
    forest biomass to contribute to meeting the ambitious mandate to
    produce 36 billion gallons of renewable fuels annually by 2022.
        This definition also significantly restricts the use of forest
    biomass from naturally growing and regenerating forests, which make up
    more than 90 percent of our nation's non-Federal forests. By doing so,
    it removes potential markets and viable economic options needed by
    private forest owners to support thinning for a variety of sustainable
    forest management practices, and who are already experiencing economic
    pressures from the steep declines in traditional markets such as solid
    wood and pulp and paper manufacturing.
        The definition for qualifying forest biomass in the EISA
    discourages necessary and appropriate forest management activities that
    promote forest health and sustainability. Proper forest management
    focuses on moving the forest toward its desired condition. No matter
    the desired condition, appropriate management often includes removing
    material that could be used productively. By using specific
    definitions, such as slash, planted trees, residues, and pre-commercial
    thinning to limit the material that can used productively contradicts,
    rather than promotes, sound forest management.
        Private landowners recognize that their forest's health depends on
    the health of neighboring forests. Limiting renewable biofuels from
    Federal lands limits the options of Federal land managers to manage for
    a healthy forest, which threaten private forests, and constricts the
    areas that can support a biofuels plant, especially in the West. This
    could mean large swaths of the country could not have adequate supply
    to support a plant without access to renewable biomass from Federal
    lands.
        The current definition also creates complex chain-of-custody
    requirements that could cause fuel manufacturers to exclude large
    portions of potential feedstock supply in order to meet compliance
    requirements. If identifying qualifying feedstock becomes too complex
    or costly, project developers may forego the development of facilities
    that use forest biomass altogether, thereby placing the overall RFS in
    jeopardy.
    IV. NAFO is prepared to work with Congress and other stakeholders to
            realize the contributions of working forests in energy policy
            in an environmentally responsible way.
        NAFO is prepared to help develop a constructive approach using
    forest biomass to help meet our nation's energy needs. Notwithstanding
    the strong record of environmental benefits private forests provide,
    NAFO is prepared to work with policy makers and other stakeholders to
    ensure that forest biomass, and all other sources of renewable energy,
    help meet our renewable energy objectives in an environmentally
    responsible way.
        NAFO suggests the Committee support a Federal renewable fuel policy
    that promotes rather than discourages the use of forest biomass for
    renewable energy. Federal policy, and definitions of qualifying forest
    biomass in particular, should be broad and inclusive so as to encourage
    forest biomass utilization and foster cost-effective compliance. The
    current RFS definition is too restrictive, placing forest biomass at a
    disadvantage with respect to other feedstocks and ultimately
    discouraging its use.
        NAFO respectfully requests that Congress consider H.R. 1190 as it
    reviews the Federal RFS. H.R. 1190 amends the Federal renewable
    biofuels standard so that it is consistent with the definition codified
    in the 2008 Farm Bill. This definition establishes a level playing
    field for forest biomass and positions forest owners to make a full
    contribution toward achieving the RFS objectives. NAFO supports H.R.
    1190 and urges Congress to enact it.
    V. Conclusion
        NAFO strongly supports our nation's efforts to establish new
    sources of renewable energy, and thereby reduce its dependence on
    fossil fuels and imported energy. America's working forests can play a
    fundamental role in meeting these new and growing energy needs. U.S.
    policies should encourage investment in forests as a source of
    renewable energy by establishing non-restrictive definitions of forest
    biomass eligible for use in renewable energy programs.
        The RFS should fully include forest biomass as a renewable energy
    source and ensure that the definition of biomass encompasses the full
    range of forest biomass, including: trees and other plants; forest
    residuals; and wood byproducts including sawdust, bark, wood chips, and
    dissolved wood. Such an approach will enable our country to meet its
    renewable fuel objectives. At the same it, it will allow working
    forests to make their full contribution to our nation's renewable
    energy portfolio while providing important additional environmental
    benefits, such as reduced GHG emissions, clean water, wildlife habitat
    quality recreation and other environmental benefits Americans need and
    enjoy.
        For more information, please contact:

    National Alliance of Forest Owners
    (202) 367-1163
    info@nafoalliance.org
                                     ______

    Supplemental Material Submitted by Hon. Tim Holden, a Representative in
                           Congress from Pennsylvania
                                   Exhibit 1
    Hon. Lisa Jackson,
    Administrator,
    Environmental Protection Agency,
    Washington, D.C.

        Dear Administrator Jackson:

        We are writing to request an immediate extension of the comment
    period for proposed rulemaking pertaining to the Renewable Fuel
    Standard (RFS), as amended by the Energy Independence and Security Act
    (EISA, P.L. 110-40), to allow an additional 120 days for comment.
        We believe that the current 60 day comment period does not provide
    sufficient time for the public to review the 549-page Notice of
    Proposed Rulemaking and 822-page regulatory impact analysis, nor does
    it allow adequate time for people to prepare their comments. Since the
    Environmental Protection Agency (EPA) is planning to provide details
    about its lifecycle greenhouse gas analysis during meetings in June,
    the current deadline limits the ability of people to consider and
    respond to the information expected to be presented at those meetings.
        The future of our biofuels industry is too important to rush to
    judgment on such important and critical issues as what constitutes a
    renewable biomass feedstock and how to consider indirect land use
    changes. Additionally, we believe the provisions in the underlying
    statute must be modified in order to fully ensure that the regulations
    are based on sound scientific principles. If we want the biofuels
    industry to be successful and if we are serious about decreasing our
    dependence on foreign oil, the comment period must be extended while we
    all work to advance the goal of achieving a full range of renewable
    options to meet our fuel needs.
        Thank you in advance for considering this request.
                Sincerely,
                [GRAPHIC] [TIFF OMITTED] 51922.008

                                   Exhibit 2
    [GRAPHIC] [TIFF OMITTED] 51922.009

    [GRAPHIC] [TIFF OMITTED] 51922.010

                                   Exhibit 3
    March 2, 2009

    Hon. Arnold Schwarzenegger,
    Governor,
    Office of the Governor,
    Sacramento, CA.

    RE: Opposed to Selective Enforcement of Indirect Effects in CA LCFS

        Dear Governor Schwarzenegger,

        We are writing regarding the California Air Resources Board's (ARB)
    ongoing development of the Low Carbon Fuel Standard (LCFS). With the
    rulemaking nearing its final stage, we would like to offer comments on
    the critical issue of how to address the issue of indirect, market-
    mediated effects.
        As you are aware, ARB staff continues to push a regulation that
    includes an indirect land use change (iLUC) penalty for biofuels. To be
    clear, this effect is not the direct land conversion from growing crops
    for fuel. It is the alleged indirect, price-induced land conversion
    effect that could occur in the world economy as a result of any
    increase in demand for agricultural production. The ability to predict
    this alleged effect depends on using an economic model to predict
    worldwide carbon effects, and the outcomes are unusually sensitive to
    the assumptions made by the researchers conducting the model runs. In
    addition, this field of science is in its nascent stage, is
    controversial in much of the scientific community, and is only being
    enforced against biofuels in the proposed LCFS.
        The push to include iLUC in the carbon score for biofuel is driven
    at least partially by concerns about global deforestation. There is no
    question that global deforestation is a problem, and that indirect
    effects must be looked at very carefully to ensure that future fuels
    dramatically reduce GHG emissions without unintended consequences. The
    scientific community is actively seeking ways to mitigate
    deforestation, enhance efficient land use, feed the poor and
    malnourished and reduce global warming. Because of the complex and
    important issues involved, it is critical that we rely on science-based
    decision-making to properly determine and evaluate the indirect effects
    of all fuels, as well as any predicted changes in agricultural and
    forestry practices. In a general sense, it is worth noting that most
    primary forest deforestation is currently occurring in places like
    Brazil, Indonesia and Russia as a direct result of logging, cattle
    ranching and subsistence farming. Adding an iLUC penalty to biofuels
    will hold the sector accountable to decision-making far outside of its
    control (i.e., for decisions related to the supply chains of other
    products), and is unlikely to have any effect on protecting forests or
    mitigating GHG emissions as a result of land management practices. But
    because indirect effects are not enforced against any other fuel in the
    proposed LCFS, an iLUC penalty will chill investment in both
    conventional and advanced biofuel production, including advanced
    biofuels made from dedicated energy feedstocks such as switchgrass and
    miscanthus, which have the potential to make the agricultural sector
    far less resource-intensive and could provide a significant carbon
    negative source of transportation fuel.
        More than 20 scientists wrote to the ARB in June 2008 suggesting
    that more time and analysis is required to truly understand the iLUC
    effect of biofuels. In addition to iLUC, we know very little about the
    indirect effects of other fuels, and therefore cannot establish a
    proper relative value for indirect effects among the various compliance
    fuels and petroleum under the LCFS. In consideration of this and other
    rulemaking activities and research conducted since June 2008, we, the
    undersigned 111 scientists, continue to believe that the enforcement of
    any indirect effect, including iLUC, is highly premature at this time,
    based on the following two principles:
    (1) The Science Is Far Too Limited and Uncertain For Regulatory
            Enforcement
        ARB staff is proposing to enforce a penalty on all biofuels for
    indirect land use change as determined by a computable general
    equilibrium (CGE) model called GTAP. This model is set to a static
    world economic condition (e.g., 2006), then shocked with a volume of
    biofuel to create the perceived land conversion result. The modeling
    outcome is applicable to the set of assumptions used for that
    particular run, but is not particularly relevant when there is a shift
    in policy, weather, world economic conditions or other economic, social
    or political variables. For example, by definition, these models assume
    zero innovation, which means they could not have predicted the 500%
    increase in corn yields since 1940, the tripling of wheat yields since
    1960, or the 700% increase in yield that can occur if farmers in
    developing countries adopt higher yield seed varieties and more
    efficient farming practices. This inability to predict innovation is
    not limited to agriculture; similar attempts to use economic
    equilibrium models in other emerging markets like telephony or
    computing would have been equally unsuccessful. As discussed, the model
    runs are unusually sensitive to the assumptions made by the modelers,
    which is why the iLUC modeling results published thus far differ by a
    factor of at least four, and under some scenarios, are actually zero
    for today's biofuels. Even at this late stage in the LCFS process, the
    GTAP model runs still do not reflect basic on-the-ground realities,
    such as the use of marginal and idle lands. They do not reflect recent
    articles about the potential for energy crops to absorb carbon at
    higher rates than previously thought. A partial solution to this
    problem is to conduct a series of model runs with different assumptions
    and adjustments. Unfortunately, this has not occurred at ARB
    (researchers have run limited sensitivity analysis within the current
    set of primary assumptions). We are only in the very early stages of
    assessing and understanding the indirect, market-mediated effects of
    different fuels. Indirect effects have never been enforced against any
    product in the world. California should not be setting a wide-reaching
    carbon regulation based on one set of assumptions with clear omissions
    relevant to the real world.
    (2) Indirect Effects Are Often Misunderstood And Should Not Be Enforced
            Selectively
        In basic terms, there is only one type of carbon impact from a
    commercial fuel: its direct effect. Direct carbon effects are those
    directly attributable to the production of the fuel, which in the case
    of biofuel includes the land converted to produce the biofuel
    feedstock. Indirect effects, on the other hand, are those that
    allegedly happen in the marketplace as a result of shifting behaviors.
    As such, penalizing a biofuel gallon for direct and indirect land use
    change is the equivalent of ascribing the carbon impact of land
    converted to produce biofuel feedstock as well as the land needed to
    produce another, allegedly displaced supply chain (e.g., soy production
    for food). Leaving aside the issue of whether these effects can be
    predicted with precision or accuracy, or whether such a penalty is
    appropriate for the LCFS, it is clear that indirect effects should not
    be enforced against only one fuel pathway. Petroleum, for example, has
    a price-induced effect on commodities, the agricultural sector and
    other markets. Electric cars will increase pressure on the grid,
    potentially increasing the demand for marginal electricity production
    from coal, natural gas or residual oil. Yet, to date, ARB is proposing
    to enforce indirect effects against biofuel production only. This
    proposal creates an asymmetry or bias in a regulation designed to
    create a level playing field. It violates the fundamental presumption
    that all fuels in a performance-based standard should be judged the
    same way (i.e., identical LCA boundaries). Enforcing different
    compliance metrics against different fuels is the equivalent of picking
    winners and losers, which is in direct conflict with the ambition of
    the LCFS.
        Proponents of iLUC inclusion claim that all regulations are
    uncertain. This is true. However, the level of uncertainty implicated
    here far outweighs that found in other regulatory fields. For example,
    the European Parliament declared in December that the iLUC of biofuel
    ``is not currently expressed in a form that is immediately usable by
    economic operators.'' \1\ They decided not to incorporate iLUC
    penalties in their biofuel programs and initiated further analysis of
    the issue. It is also not enough to suggest that iLUC is a significant
    indirect effect, while other indirect effects are likely smaller. The
    magnitude of the alleged iLUC effect ranges from zero to very large,
    depending on the assumptions utilized. This is also likely true for
    other fuels, especially with regard to the marginal gallons of
    petroleum that are coming into the marketplace, such as heavy oil,
    enhanced oil recovery, and tar sands. Either way, even small effects
    are significant under the LCFS. Just a few g/MJ separate corn ethanol
    from petroleum in the proposed regulation, and advanced biofuel is very
    close to CNG and hydrogen under certain scenarios. We agree with the
    sentiment expressed by many experts that while indirect effects are
    important to understand, enforcing them prematurely and selectively on
    only certain fuels in a performance-based standard could have major
    negative consequences, even for GHG mitigation. Put another way, no
    level of certainty justifies asymmetrical enforcement of indirect
    effects.
    ---------------------------------------------------------------------------
        \1\ http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//
    TEXT+TA+P6-TA-20080613+0+DOC+XML+V0//EN&language=EN#BKMD-27.
    ---------------------------------------------------------------------------
        Given the limited time, a reasonable solution to the challenges
    discussed above is to submit an LCFS regulation based on direct carbon
    effects (including direct land use impacts) and support a rigorous 24
    month analysis of the indirect, market-mediated effects of petroleum
    and the entire spectrum of alternative fuels, regardless of source. The
    analysis could be conducted in collaboration with other institutions
    and governments implementing carbon-based fuel standards, and should
    include a consideration of the best way to prevent carbon effects
    outside the primary system boundary, including promoting sound land use
    practice with more direct policy solutions. This approach is consistent
    with the principle that all fuels should be judged through the same
    lens in a performance-based standard, as well as the approach taken by
    the European Parliament. It is worth noting that an LCFS policy based
    on direct effects already favors non-land intensive, advanced biofuel
    production over conventional biofuel production.
        The LCFS provides an incredible opportunity to reduce the carbon
    intensity of transportation fuel and promote a more sustainable
    transportation fuel marketplace. We commend your leadership and the ARB
    staff for their ability to process a challenging set of scientific data
    resources into a workable regulation. However, it is critical that the
    LCFS stay on course with regard to its primary mission of establishing
    a level, carbon-based playing field for all fuels.
        We are writing this letter as researchers in the field of biomass
    to bioenergy conversion, but the signatories do not represent the
    official views of the home institutions, universities, companies, the
    Department of Energy, the United States Department of Agriculture, or
    any of the National Laboratories. We look forward to working with ARB
    to ensure that the regulation reflects the best science available, and
    takes a policy approach that is balanced across all fuel pathways.
                Sincerely,

    Blake A. Simmons, Ph.D.,
    Vice-President, Deconstruction Division,
    Joint BioEnergy Institute,
    Manager, Biomass Science and Conversion Technology,
    Sandia National Laboratories;

    Jay D. Keasling, Ph.D.,
    Director,
    Physical Biosciences Division,
    Lawrence Berkeley National Laboratory,
    Hubbard Howe Distinguished Professor of Biochemical Engineering,
    Departments of Chemical Engineering and Bioengineering,
    University of California, Berkeley,
    Chief Executive Officer,
    Joint BioEnergy Institute;

    Harvey W. Blanch, Ph.D.,
    Chief Science and Technology Officer,
    Joint BioEnergy Institute,
    Lawrence Berkeley National Laboratory
    Member, National Academy of Engineering,
    Merck Professor of Chemical Engineering,
    University of California, Berkeley;

    Robert B. Goldberg, Ph.D.,
    Distinguished HHMI University Professor &
    Member, National Academy of Sciences,
    Department of Cell, Developmental, & Molecular Biology,
    University of California, Los Angeles;

    Pam Ronald, Ph.D.,
    Vice-President, Feedstocks Division,
    Joint BioEnergy Institute,
    Department of Plant Pathology,
    University of California, Davis;

    Paul D. Adams, Ph.D.,
    Deputy Division Director, Physical Biosciences Division,
    Lawrence Berkeley National Laboratory
    Adjunct Professor, Department of Bioengineering, U.C. Berkeley,
    Vice President for Technology, the Joint BioEnergy Institute
    Head, Berkeley Center for Structural Biology;

    Bruce E. Dale, Ph.D.,
    Distinguished University Professor,
    Dept. of Chemical Engineering & Materials Science,
    Michigan State University;

    Charles E. Wyman, Ph.D.,
    Ford Motor Company Chair in Environmental Engineering Center for
    Environmental Research and Technology (CE-CERT),
    Professor of Chemical and Environmental Engineering Bourns College of
    Engineering,
    University of California, Riverside;

    Alvin J.M. Smucker, Ph.D.,
    Professor of Soil Biophysics,
    MSU Distinguished Faculty,
    Michigan State University;

    Greg Stephanopoulos, Ph.D.,
    W.H. Dow Professor of Chemical Engineering and Biotechnology,
    Department of Chemical Engineering,
    Massachusetts Institute of Technology;

    Sharon Shoemaker, Ph.D.
    Director,
    California Institute for Food and Agriculture Research,
    University of California, Davis;

    Stephen R. Kaffka, Ph.D.,
    Extension Agronomist,
    Department of Plant Sciences,
    University of California, Davis;

    Terry Hazen, Ph.D.,
    Director of Microbial Communities,
    Joint BioEnergy Institute,
    Scientist/Department Head,
    Ecology Department,
    Earth Sciences Division,
    Lawrence Berkeley National Laboratory;

    Lonnie O. Ingram, Ph.D.,
    Director, Florida Center for Renewable Chemicals and Fuels,
    Dept. of Microbiology and Cell Science,
    University of Florida;

    George W. Huber, Ph.D.,
    Armstrong Professional Development Professor,
    Department of Chemical Engineering,
    University of Massachusetts;

    Kenneth G. Cassman, Ph.D.,
    Director, Nebraska Center for Energy Science Research,
    Heuermann Professor of Agronomy,
    University of Nebraska, Lincoln;

    Om Parkash (Dhankher), Ph.D.,
    Assistant Professor,
    Department of Plant, Soil and Insect Sciences,
    University of Massachusetts, Amherst;

    Cole Gustafson, Ph.D.,
    Professor,
    Department of Agribusiness and Applied Economics,
    North Dakota State University;

    Robert C. Brown, Ph.D.,
    Anson Martson Distinguished Professor in Engineering,
    Gary and Donna Hoover Chair in Mechanical Engineering Professor,
    Mechanical Engineering, Chemical and Biological Engineering, and
    Agricultural and Biosystems,
    Engineering Director, Bioeconomy Institute Director, Center for
    Sustainable Environmental Technologies
    Iowa State University;

    John Ralph, Ph.D.,
    Professor, Department of Biochemistry and Biological Systems
    Engineering,
    University of Wisconsin-Madison;

    Daniel G. De La Torre Ugarte, Ph.D.,
    Professor, Agricultural Policy Analysis Center,
    Department of Agricultural Economics,
    The University of Tennessee;

    Michael A. Henson, Ph.D.,
    Co-Director,
    Institute for Massachusetts Biofuels Research (TIMBR),
    University of Massachusetts, Amherst;

    Danny J. Schnell, Ph.D.,
    Professor and Head,
    Dept. of Biochemistry & Molecular Biology,
    University of Massachusetts, Amherst;

    Jeffrey L. Blanchard, Ph.D.,
    Assistant Professor, Department of Microbiology,
    Morrill Science Center,
    University of Massachusetts, Amherst;

    Y.-H. Percival Zhang, Ph.D.,
    Biological Systems Engineering Department,
    Virginia Tech University;

    Venkatesh Balan, Ph.D.,
    Assistant Professor,
    Department of Chemical Engineering and Material Science,
    Michigan State University;

    Gemma Reguera, Ph.D.,
    Assistant Professor of Microbiology and Molecular Genetics,
    Michigan State University;

    Wayne R. Curtis, Ph.D.,
    Professor of Chemical Engineering,
    Penn State University;

    James C. Liao, Ph.D.,
    Chancellor's Professor,
    Department of Chemical and Biomolecular Engineering,
    University of California, Los Angeles;

    Brian G. Fox, Ph.D.,
    Marvin Johnson Professor of Fermentation Biochemistry,
    Department of Biochemistry,
    Great Lakes Bioenergy Research Center,
    University of Wisconsin;

    Robert Landick, Ph.D.,
    Dept. of Biochemistry,
    Univ. of Wisconsin-Madison;

    Prof. dr. ir. Christian V. Stevens,
    Professor Chemical Modification of Renewable Resources,
    Faculty of Bioscience Engineering,
    Director of the Center of Renewable Resources,
    Ghent University, Belgium;

    Alexander J. Malkin, Ph.D.,
    Scientific Capability Leader for BioNanoSciences,
    Physical and Life Sciences Directorate,
    Lawrence Livermore National Laboratory;

    Dennis J. Miller, Ph.D.,
    Department of Chemical Engineering and Materials Science,
    Michigan State University;

    David Keating, Ph.D.,
    Great Lakes Bioenergy Research Center,
    University of Wisconsin-Madison;

    Susan Leschine, Ph.D.,
    Professor,
    University of Massachusetts, Amherst,
    Qteros, Inc.;

    David T. Damery, Ph.D.,
    Associate Professor,
    Dept. of Natural Resources Conservation,
    University of Massachusetts, Amherst;

    Kenneth Keegstra, Ph.D.,
    University Distinguished Professor,
    Department of Plant Biology,
    Michigan State University;

    Tobias I. Baskin, Ph.D.,
    Biology Department,
    University of Massachusetts;

    Christopher M. Saffron, Ph.D.,
    Assistant Professor,
    Dept. of Biosystems and Agricultural Engineering,
    Dept. of Forestry,
    Michigan State University;

    Emily Heaton, Ph.D.,
    Asst. Prof. of Agronomy,
    Iowa State University;

    Kurt D. Thelen, Ph.D.,
    Associate Professor,
    Dept. of Crop & Soil Sciences,
    Michigan State University;

    Bin Yang, Ph.D.,
    Associate Research Engineer,
    Bourns College of Engineering,
    Center for Environmental Research and Technology (CE-CERT),
    University of California, Riverside;

    Andrea Festuccia, Ph.D.,
    Professor,
    University of Rome-Italy;

    Francesca del Vecchio, Ph.D.,
    Professor,
    Cambridge University,
    St. John Biochemistry Department,
    Cambridge, UK;

    David Shonnard, Ph.D.,
    Department of Chemical Engineering,
    Michigan Technological University;

    R. Mark Worden, Ph.D.,
    Professor,
    Dept. of Chemical Engineering and Materials Science,
    Michigan State University;

    Satish Joshi, Ph.D.,
    Associate Professor,
    Department of Agricultural Economics,
    Michigan State University;

    Timothy Volk, Ph.D.,
    Senior Research Associate,
    346 Illick Hall,
    Faculty of Forest and Natural Resources Management,
    SUNY-ESF;

    Henrik Scheller, Ph.D.,
    Director of Plant Cell Wall Biosynthesis,
    Joint BioEnergy Institute,
    Lawrence Berkeley National Laboratory;

    Joshua L. Heazlewood, Ph.D.,
    Director of Systems Biology,
    Joint BioEnergy Institute,
    Lawrence Berkeley National Laboratory;

    Dominique Loque, Ph.D.,
    Director of Cell Wall Engineering,
    Joint BioEnergy Institute,
    Lawrence Berkeley National Laboratory;

    David A. Grantz, Ph.D.,
    Director, University of California Kearney Agricultural Center,
    Plant Physiologist and Extension Air Quality Specialist Department of
    Botany and Plant,
    Sciences and Air Pollution Research Center University of California at
    Riverside;

    Rajat Sapra, Ph.D.,
    Director of Enzyme Engineering,
    Joint BioEnergy Institute,
    Biomass Science and Conversion Technology,
    Sandia National Laboratories;

    Masood Hadi, Ph.D.,
    Director of High-Throughput Sample Prep,
    Joint BioEnergy Institute,
    Biomass Science and Conversion Technology,
    Sandia National Laboratories;

    Swapnil Chhabra, Ph.D.,
    Director of Host Engineering,
    Joint BioEnergy Institute,
    Lawrence Berkeley National Laboratory;

    Seema Singh, Ph.D.,
    Director of Dynamic Studies of Biomass Pretreatment,
    Joint BioEnergy Institute,
    Biomass Science and Conversion Technology,
    Sandia National Laboratories;

    Bradley Holmes, Ph.D.,
    Director of Biomass Pretreatment and Process Engineering,
    Joint BioEnergy Institute,
    Biomass Science and Conversion Technology,
    Sandia National Laboratories;

    Manfred Auer, Ph.D.,
    Director Physical Analysis,
    Joint BioEnergy Institute,
    Physical Biosciences Division,
    Lawrence Berkeley National Laboratory;

    Phil Hugenholtz, Ph.D.,
    Senior Scientist,
    Joint BioEnergy Institute,
    Joint Genome Institute,
    Lawrence Berkeley National Laboratory;

    Chris Petzold, Ph.D.,
    Scientist,
    Joint BioEnergy Institute,
    Lawrence Berkeley National Laboratory;

    Steven Singer, Ph.D.,
    Scientist,
    Joint BioEnergy Institute,
    Lawrence Livermore National Laboratory;

    Michael Thelen, Ph.D.,
    Senior Scientist,
    Joint BioEnergy Institute,
    Lawrence Livermore National Laboratory;

    David A. Grantz, Ph.D.,
    Director, University of California Kearney Agricultural Center,
    Plant Physiologist and Extension Air Quality Specialist Department of
    Botany and Plant Sciences and Air Pollution Research Center University
    of California at Riverside;

    David Reichmuth, Ph.D.,
    Scientist, Sandia National Laboratories;

    Amy J. Powell, Ph.D.,
    Scientist, Department of Computational Biology,
    Sandia National Laboratories;

    Anthe George, Ph.D.,
    Post-doctoral Fellow,
    Joint BioEnergy Institute,
    Biomass Science and Conversion Technology,
    Sandia National Laboratories;

    Ozgul Persil Cetinkol,
    Post-doctoral Fellow,
    Joint BioEnergy Institute,
    Lawrence Berkeley National Laboratory;

    Supratim Datta, Ph.D.,
    Post-doctoral Fellow,
    Joint BioEnergy Institute,
    Biomass Science and Conversion Technology,
    Sandia National Laboratories;

    Zhiwei Chen, Ph.D.,
    Post-doctoral Fellow,
    Joint BioEnergy Institute,
    Biomass Science and Conversion Technology,
    Sandia National Laboratories;

    Joshua Park, Ph.D.,
    Post-doctoral Fellow,
    Joint BioEnergy Institute,
    Biomass Science and Conversion Technology,
    Sandia National Laboratories;

    Chenlin Li, Ph.D.,
    Post-doctoral Fellow,
    Joint BioEnergy Institute,
    Biomass Science and Conversion Technology,
    Sandia National Laboratories;

    Hanbin Liu, Ph.D.,
    Post-doctoral Fellow,
    Joint BioEnergy Institute,
    Biomass Science and Conversion Technology,
    Sandia National Laboratories;

    Richard Hamilton, Ph.D.,
    Chief Executive Officer,
    Ceres, Inc.;

    Richard B. Flavell, Ph.D.,
    Chief Scientific Officer,
    Ceres, Inc.;

    Robert J. Wooley, Ph.D., P.E.,
    Director, Process Engineering,
    Abengoa;

    Tim Eggeman, Ph.D., P.E.,
    Chief Technology Officer, Founder,
    ZeaChem Inc.;

    Dan W. Verser, Ph.D.,
    Co-Founder,
    EVP R&D,
    ZeaChem Inc.;

    Jose Goldemberg, Ph.D.,
    Professor Emeritus University of Sao Paulo,
    Sao Paulo, Brazil and Former Secretary for the Environment;

    Neal Gutterson, Ph.D.,
    President and CEO,
    Mendel Biotechnology Inc.;

    James Zhang, Ph.D.,
    VP of Tech Acquisition and Alliances,
    Mendel Biotechnology Inc.;

    Mark D. Stowers, Ph.D.,
    Vice President, Research and Development,
    POET;

    Steen Skjold-J Our reliance on fossil fuels puts petrodollars in the hands
            of dictators and terrorists. Based on 2007 production
            estimates, a $5 increase in the price of crude oil will add $5
            billion annually to the coffers of Venezuela, $7.5 billion to
            Iran, and $18 billion to Russia. This money allows these
            countries to act against the best interests of the United
            States. In 2008, U.S. counter-terrorism officials declared that
            Saudi Arabia, the world's top oil producer, remains the world's
            leading source of money for Al Qaeda and other extremist
            networks.

       Oil Kills Democracy. It's a simple fact that democracies
            rarely, if ever, go to war with one another. Unfortunately, oil
            kills democracy. There are twenty-three countries in the world
            whose oil and gas products constitute more than 60% of their
            total exports. None of these countries are democracies.
            Creating a world of more democratic states in which leaders
            cannot keep their populations at bay with petrodollars requires
            a world in which fewer fossil fuels are consumed.

       Protecting the world's oil infrastructure costs U.S.
            taxpayers billions. The United States is responsible for
            patrolling the world's sea lanes and ensuring safe passage for
            seaborne commerce, much of which is oil products. The U.S. Navy
            is budgeting $28.1 billion for operations alone in 2009. A
            significant portion of this outlay is to make sure oil flows
            are not interrupted.

       The Cost of Oil Places Undue Stress on the U.S. Military.
            Every time the price of oil increases by $10 per barrel, the
            Department of Defense is forced to spend another $1.3 billion
            on fuel--that's the equivalent of the Marine Corps' entire
            annual procurement budget. Fuel efficiency also has life and
            death consequences: seventy percent of battlefield tonnage is
            attributed to transporting fuel. Attacks on fuel convoys in
            both Iraq and Afghanistan have become a major cause of U.S.
            casualties. A more fuel-efficient military would save the U.S.
            billions of dollars and untold lives.

       Climate Change Places Undue Stress on the U.S. Military. One
            the most drastic effects of climate change is an increase in
            the intensity and frequency of tropical storms. Hurricane
            Katrina proved how devastating this can be not just for our
            civilian population, but also for our armed services. Military
            units were needed to respond to the storm, and the cost of
            repairing the damage to the Pascagoula Naval Station in
            Mississippi reached several billion dollars. These are
            resources that could have been better spent on improving
            intelligence, hunting down terrorists, or sending critical
            equipment to our troops in Iraq and Afghanistan.

       Climate Change Creates Political Instability and Acts as a
            Catalyst for Failed States and Terrorism. Climate change causes
            drought, the disappearance of drinking water, and a rise in sea
            levels. Billions of people live near coastal plains that could
            easily end up underwater. This would cause the mass-migration
            of millions of people and create ungoverned spaces where
            terrorists can flourish, just as they did in Afghanistan in the
            1990s and just as they currently do in Somalia. Competition
            over resources, which increases with drought and dwindling
            water supplies, can also lead to violence. The most tragic
            evidence of this is the conflict in Darfur, where competition
            between herders and farmers for land sparked a genocidal
            conflict that has claimed the lives of 400,000 people.

        Having served in uniform ourselves, there is nothing we take more
    seriously than the safety and well-being of our country. We are calling
    on the State of California to lend us a hand in keeping America safe by
    enacting a fuel regulation that is unbiased and does not enforce
    indirect carbon effects against only one type of fuel. There is no
    silver bullet to the energy and security challenges we face, but
    biofuels have a crucial role to play. We hope California will continue
    to be a national leader in energy issues and allow biofuels to play
    that role.
                Sincerely,

    Robert ``Bud'' McFarlane,
    National Security Advisor to President Ronald Reagan,
    Lieutenant Colonel, U.S. Marine Corps, 1959-1979;

    William C. Holmberg,
    Chairman of the Biomass Coordinating Committee,
    American Council on Renewable Energy,
    Lieutenant Colonel, U.S. Marine Corps (Retired), 1951-1970;

    David R. Adams,
    Corporal, U.S. Marine Corps & ARNG, 1978-1988;

    William Banta,
    Major, U.S. Marine Corps, 1951-1961;

    Merton J. Batchelder, Jr.,
    Captain, U.S. Marine Corps, 1951-1959;

    Rye Barcott,
    Captain, U.S. Marine Corps, 2001-2006;

    John L. Berman,
    Captain, U.S. Air Force, 1951-1955;

    Joseph E. Bles,
    Major, U.S. Marine Corps & USAR (Retired), 1960-1992;

    Herbert W. Bruch,
    Commander, U.S. Navy (Retired), 1951-1971;

    Edward A. Burkhalter, Jr.,
    Vice Admiral, U.S. Navy (Retired), 1951-1986;

    Vivian T. Chen,
    Captain, U.S. Public Health Service (Retired), 1979-2004;

    Robert C. Cherry,
    Captain, U.S. Marine Corps, 1951-1956;

    Robert L. Church,
    Lieutenant (SG), U.S. Navy, 1972-1978;

    Paul Clarke,
    Lieutenant Colonel, U.S. Air Force, 1987-2007;

    Charles G. Cooper,
    Seaman 1st/Class, U.S. Navy, 1945-1946;

    William S. Daniel,
    Colonel, U.S. Marine Corps (Retired), 1945-1975;

    Robert Diamond,
    Lieutenant, U.S. Navy, 1999-2006;

    Russell Dramstad,
    SMSGT, U.S. Army (Retired), 1966-1968,
    SMSGT, South Dakota National Guard (Retired), 1971-2001;

    Robert F. Dunn,
    Vice Admiral, U.S. Navy (Retired), 1951-1989;

    Michael T. Eckhart,
    Petty Officer 2nd/Class, U.S. Navy, 1965-1971;

    Michael Edwards,
    Captain, U.S. Marine Corps, 2001-2007;

    Christopher Finan,
    Captain, U.S. Air Force, 2000-2007;

    Joel N. Gordus,
    Captain, U.S. Air Force, 1968-1972;

    William P. Gorski,
    Lieutenant Colonel, U.S. Marine Corps (Retired) 1951-1971;

    John J. Grace,
    Colonel, U.S. Marine Corps (Retired), 1946-1978;

    Peter L. Hilgartner,
    Colonel, U.S. Marine Corps (Retired), 1951-1981;

    William P.T. Hill,
    Captain, U.S. Marine Corps, 1951-1961;

    Scott Holcomb,
    Captain, U.S. Army, 1998-2004;

    William E. Hutchison,
    Colonel, U.S. Marine Corps (Retired), 1951-1976;

    Erica Jeffries,
    Captain, U.S. Army, 1998-2003;

    Ted Kaehker,
    Commander, U.S. Navy (Retired), 1984-2006;

    Leland S. Kollmorgen,
    Vice Admiral, U.S. Navy (Retired), 1951-1983;

    Gerald E. Kuecker,
    Lieutenant Commander, U.S. Navy, 1964-1985;

    Peter Lohman,
    Captain, U.S. Army, 2001-2005;

    William R. Maloney,
    Lieutenant General, U.S. Marine Corps (Retired), 1951-1985;

    William T. Marin,
    Captain, U.S. Navy (Retired), 1951-1978;

    Deny V. McGinn,
    Vice Admiral, U.S. Navy (Retired), 1967-2002;

    Michael W. McGowan,
    Lieutenant, U.S. Air Force, 1991-1995;

    Jason Mills,
    Captain, U.S. Marine Corps, 1999-2004;

    Melissa Epstein-Mills,
    Captain, U.S. Marine Corps, 2002-2006;

    James Morin,
    Captain, U.S. Army, 1997-2007;

    Donald H. Morton,
    Captain, U.S. Navy (Retired), 1954-1984;

    Philip Miller Pahl,
    Colonel, U.S. Air Force (Retired), 1951-1977;

    Charles E. Parker,
    1st Lieutenant, U.S. Army Reserve, 1957-1967;

    Jonathan Powers,
    Captain, U.S. Army, 2000-2008;

    Douglas Raymond,
    Captain, U.S. Army, 1995-2000;

    Brooke F. Read, Jr.,
    Colonel, U.S. Marine Corps, 1951-1978;

    Alex Rossmiller,
    Intelligence Officer, Defense Intelligence Agency, 2004-2006;

    Frederick M. Ruthling,
    Captain, U.S. Air Force, 1984-1991;

    Erik Saar,
    Sergeant, U.S. Army, 1998-2004;

    Virginia K. Saba,
    Captain, U.S. Public Health Service (Retired), 1963-1985;

    Donald E. Shanks,
    Warrant Officer/2, U.S. Marine Corps (Retired), 1986-2007;

    Maxwell E. Shauck,
    Seaman 3/C, Enlisted Pilot, U.S. Navy, 1958-1962;

    John R. Sheridan,
    Private, U.S. Army, 1958-1960;

    Terron Sims II,
    Captain, U.S. Army, 2000-2005;

    Drew Sloan,
    Captain, U.S. Army, 2002-2007;

    Richard W. Smith,
    Colonel, U.S. Marine Corps (Retired), 1951-1977;

    Charles White Stockel,
    Colonel, U.S. Army, 1942-1972;

    John S. Storm,
    Commander, U.S. Navy (Retired), 1954-1976;

    Milton R. Swayze,
    Specialist 4, U.S. Army, 1969-1970;

    Orrie D. Swayzie,
    Captain, U.S. Air Force, 1965-1972;

    Maura Sullivan,
    Captain, U.S. Marine Corps, 2001-2006;

    George R. Thomas,
    Lieutenant (JG), U.S. Navy, 1959-1962;

    George M. Van Sant,
    Colonel, U.S. Marine Corps (Retired), 1945-1977;

    Kayla Williams,
    Captain, U.S. Army, 2000-2005;

    Thomas R. Zajac,
    Corporal, U.S. Army, 1950-1954;
                                   Exhibit 5
    New Fuels Alliance
    October 23, 2008

    Mary D. Nichols, Chairman,
    California Air Resources Board,
    Headquarters Building,
    Sacramento, CA.

        Dear Chairman Nichols,

        We, the undersigned 30 companies and individuals, are writing to
    provide comment on the prospect of including indirect land use change
    (ILUC) in the California Low Carbon Fuel Standard (LCFS), and in
    general, to discuss the public policy implications of enforcing
    indirect effects of any kind in the regulation. This letter is
    submitted in response to comments submitted to the Air Resources Board
    (ARB) on the issue of ILUC over the past several months, including at
    the most recent public workshop held on October 16th.
        First and foremost, we recognize that promoting the production and
    use of biofuels could help achieve domestic and global sustainable
    development goals, but that there are challenges associated with
    growing the biofuels industry in an environmentally responsible way.
    While the growth of crop-based biofuels should not be allowed to
    exacerbate sensitive land degradation here or abroad, there is
    nonetheless an opportunity to promote positive land use development in
    the context of both conventional and advanced crop-based biofuels. As
    such, it is important that the LCFS be careful in its regulatory
    approach if it is to foster sustainable fuel production.
        The argument in favor of including ILUC in the LCFS is based on the
    belief that biofuels have significant indirect land use impacts, and
    ignoring them is the wrong public policy decision. The argument against
    including ILUC in the LCFS is based on the belief that the field of
    ILUC--and perhaps indirect impact modeling in general--is too uncertain
    to regulate at this time.
        The public policy decision to extend the scope of the LCFS from
    direct to indirect, market-mediated effects is a monumental one. This
    is true for land use change, or any other indirect effect. Direct
    impacts are relatively certain, verifiable and attributable to specific
    types of fuels. This is true because these effects are directly related
    to and traceable to the production, transportation and combustion of
    those fuels, including upstream land use change attributable to fuel
    production, such as the conversion of pasture to corn or other biofuel
    feedstock.
        Indirect impacts, on the other hand, are market- and policy-
    mediated. They are, in essence, the ripple effects of any given market
    decision in the global economy. Indirect impacts have not been enforced
    by any regulatory agency against any product in the world. Indirect
    impacts, whether applied to biofuels or any other fuel, occur as a
    consequence of a myriad of nested, policy and socioeconomic variables.
    An article published in BioScience Magazine captures the complexity of
    indirect effects, as they relate to deforestation: ``[a]t the
    underlying level, tropical deforestation is . . . best explained by
    multiple factors and drivers acting synergistically rather than by
    single-factor causation, with more than one-third of the cases being
    driven by the full interplay of economic, institutional, technological,
    cultural and demographic variables.'' \1\ This review of land change
    science goes on to conclude that it has proven difficult to achieve a
    theory of coupled land use changes that lead to useful, predictable
    outcomes for this highly complex process. Similar approaches have led
    to strikingly different outcomes depending on location, scale and other
    complex factors, making prediction uncertain.
    ---------------------------------------------------------------------------
        \1\ Helmut J. Geist & Eric F. Lambin, Proximate Causes and
    Underlying Driving Forces of Tropical Deforestation, BioScience
    Magazine, Volume 52, No. 2 (Feb. 2002).
    ---------------------------------------------------------------------------
        It may be possible to model these impacts over time, so we should
    not abandon the idea of developing the science. But it is also true
    that no model today comes close to capturing the interplay of economic,
    institutional, technological, cultural and demographic variables
    inherent with quantifying the indirect impact of any fuel. In fact, the
    economic equilibrium models being offered as the mechanisms to quantify
    (and perhaps enforce) ILUC in the LCFS were not designed for regulatory
    use--i.e., to assign specific compliance metrics to specific fuels.
    They were designed to analyze the impacts of policies in more general
    terms. Using a model to publish a paper is very different than using a
    model to assign specific values that could fundamentally change the
    business landscape for alternative energy companies. As indicated in a
    2008 GTAP paper on biofuels, referenced by the ARB LCFS website under
    GTAP peer review: ``researchers have begun to use a CGE (computable
    general equilibrium) framework [to assess biofuels], however, with
    several caveats such as lack of incorporating policy issues, absence of
    linkages to other energy markets, and land use changes, etc. Our study
    makes an attempt to address these issues. However, the studies on CGE
    modeling are few, largely due to the infancy of the industry and
    limitations on the availability of data [emphasis added].'' \2\
    ---------------------------------------------------------------------------
        \2\ See https://www.gtap.agecon.purdue.edu/resources/download/
    4034.pdf, p. 3.
    ---------------------------------------------------------------------------
        We are aware that proponents of including ILUC in the regulation
    argue that a preliminary quantification of ILUC is better than ignoring
    the impact all together; that ``zero'' is not the right number for ILUC
    for biofuels. While it is likely true that zero is not the right number
    for the indirect effects of any product in the real world, enforcing
    indirect effects in a piecemeal way could have very serious
    consequences for the LCFS. For example, zero is also not the right
    number for the indirect impact of producing a gallon of petroleum,
    using more electricity from coal and natural gas, producing advanced
    batteries and hybrid vehicles, or commercializing fuel cell technology.
    Yet, to date, ARB has not devoted any significant LCFS rulemaking
    resources to investigating the indirect effects of other fuels. If ARB
    is to enforce indirect, market-mediated effects, they must be enforced
    against all fuel pathways. The argument that zero is not the right
    number does not justify enforcing a different wrong number, or
    penalizing one fuel for one category of indirect effects while giving
    another fuel pathway a free pass.
        Proponents of ILUC inclusion insist that they know enough about
    ILUC to enforce it in a fuel regulation. For example, the June 26 UC
    letter defending ILUC inclusion states that ILUC is more certain than
    claimed because the analysis conducted to date utilizes peer-reviewed
    models like FAPRI and GTAP. However, the fact that these models are
    peer-reviewed should not be inferred to mean that they have been peer-
    reviewed to be used for the purpose of enforcing indirect effects
    against specific fuels in a carbon-based fuel regulation. CGE models
    like GTAP provide estimates of land use change in distant locations,
    but at the price of severe limits in accuracy and at the expense of a
    realistic inclusion of complex causes of land use change. It seems that
    the desire for the utility of CGE models has overwhelmed the need for
    accuracy in estimating ILUC effects. The outcome could be poor public
    policy in the early stages of an unprecedented yet incredibly important
    transition in our liquid transportation fuel economy.
        The June 26 UC letter also does not acknowledge the depth of
    uncertainty of predicting market-mediated effects of any kind, or the
    status of current research into this vast scientific space. For
    example:

       The current ILUC analysis for biofuels is very limited in
            scope. The public discussion has thus far been limited to the
            reductive effect of corn ethanol demand on world agricultural
            markets, and the possible conversion of relatively pristine
            lands that could occur from agricultural expansion. In
            addition, ARB has commented that non-corn energy crops (e.g.,
            for cellulosic ethanol) will have a similar land use ripple
            effect if, in fact, land is used. But the analysis has not
            investigated the possible counter-balancing effect (i.e.,
            benefits) of increased biofuel production, whether related to
            more sustainable agricultural land use and crop shifting,
            decreased urbanization, or the market-mediated effects of
            additional fuel supplies. Simply by increasing the
            profitability of agriculture, both domestically and overseas,
            biofuel production can have many positive effects on farmers
            and farming systems. In Californian, profitability helps
            farmers resist the pressures to transfer irreplaceable cropland
            to urban development, among other benefits. Given that land use
            change comes as a result of the interplay of so many variables,
            the exclusive focus on the reductive land use effect is of
            great concern.

       The modeling scenarios publicized to date have severe data
            and technical shortcomings. While it is true that the GTAP
            model is peer-reviewed, it is also well recognized that any
            model is only as good as the inputs used. For example, the UC
            letter states that they are using the ``state-of-the-art'' GTAP
            model to perform ILUC analysis for corn ethanol. The GTAP
            results were largely similar to those released by another
            researcher using the FAPRI model. But the UC letter fails to
            mention that they used the same land use conversion emissions
            data--a single set of data from the 1990s--for both exercises,
            without any apparent additional analysis or verification. So it
            should not be surprising that the results are largely the same.
            Other land use emissions studies have shown a ten-fold
            difference in land conversion emissions depending on what
            assumptions are used. In another example, the GTAP model does
            not include inputs for idle or CRP lands. This is a concern for
            two obvious reasons: (1) idle lands will be the first to be
            converted under any reasonable land conversion scenario; and,
            (2) any model that does not include idle and CRP land will
            produce exaggerated forest effects because the major points of
            domestic agricultural land use expansion are disabled. Lands in
            developing countries without clear rents (economic values in a
            marketplace) cannot be analyzed in GTAP. This includes much
            one-time cropland that is not accounted for or included in the
            GTAP estimates of effects. The preliminary ILUC numbers
            reviewed to date have been described as robust by several
            researchers involved, but an analysis that does not include the
            major points of domestic and international agricultural land
            expansion is not robust. It is important to note that the
            amount of U.S. agricultural land acreage dedicated to all
            crops, and coarse grains in particular, has generally declined
            during the last several decades while agricultural output has
            increased. It is also important to note that U.S. corn acreage
            has decreased in 2008. Historically in North America, advances
            in crop production technology correlate to the stabilization of
            forest use and a steady increase in forested acreage over the
            last century. Biofuel production, if carefully developed, could
            lead to a similar process in many third world settings, and the
            opposite effect of that feared. These considerations put into
            serious doubt the fundamental assumption that increased demand
            for crop-based products necessarily increases acreage planted.

       None of the available models being utilized for ILUC
            analysis are capable of taking into account the ``interplay of
            economic, institutional, technological, cultural and
            demographic variables'' inherent with land use change. For
            example, the GTAP figures presented by ARB staff on June 30
            were neither sensitive to U.S. Federal biofuels policy, which
            contains land use provisions designed to discourage certain
            types of land conversion, nor the energy or land use policies
            in those countries where the land conversion allegedly takes
            place in the scenarios modeled. This means that the ILUC
            scenarios do not (and cannot) take into account variables that
            would fundamentally change the outcome of the given modeling
            exercise, even directionally. Among the many variables driving
            deforestation and other forms of land use change are domestic
            and international policy, infrastructure development (including
            roads for oil and timber extraction), soil quality, topography,
            droughts, floods, wars, domestic cost of labor/land/fuel or
            timber, population and migration, urbanization and poverty. A
            recent paper published by the National Academy of Sciences
            (NAS) notes that, ``. . . no facet of land change research has
            been more contested than that of cause. Empirical linkages
            between proposed causal variables and land change have been
            documented, but these commonly involve the more proximate
            factors to the land-outcome end of complex explanatory
            connections, such as immigrant, subsistence farmers and
            deforestation or locally configured common property resource
            regimes and land degradation. The distal factors that shape the
            proximate ones, such as urban poverty or national policies,
            tend to be difficult to connect empirically to land outcomes,
            typically owing to the number and complexity of the linkages
            involved. Attention to proximate causes elevates the potential
            to commit errors of omission . . . .'' \3\ In trying to ascribe
            specific, numerical (CO2 e g/MJ) land use impacts to
            specific types of biofuels, ARB and UCB staff are in essence
            attempting to disentangle nested variables when it is the
            cumulative effect of these factors that cause the net outcome
            of land use change. This may be useful for policy analysis, but
            is far more dangerous as a methodology for assigning specific
            indirect land use change values to specific fuels within in a
            small fraction (CA ethanol) of one sector (motor fuels) of the
            global economy.
    ---------------------------------------------------------------------------
        \3\ B.L. Turner II, Eric F. Lambin, Anette Reenberg, The emergence
    of land change science for global environmental change and
    sustainability, PNAS vol. 104, no. 52 (Dec. 26, 2007).

       The noticeable lack of indirect effects analysis for other
            fuels, particularly oil, is of serious concern. ARB staff has
            mentioned the possibility of an ILUC analysis for petroleum,
            but land use is only a part of the overall indirect carbon
            effect of oil. The indirect effects of unmitigated petroleum
            consumption, in a world economy largely dictated by petroleum
            and energy indicators, are vast. For example, noted
            agricultural economist (and architect of the GTAP model) Wally
            Tyner recently concluded that 75% of the run-up in corn prices
            is due to increased oil prices. Advocates for ILUC inclusion
            argue that higher corn prices cause crop shifting toward corn
            and away from soybeans, which drives up the price of soybeans
            and attracts Brazilian (rainforest) acres to soybean
            production. However, the UC researchers appear more inclined to
            ascribe the carbon effects of this theoretical causal chain to
            biofuels rather than to oil. It remains unclear, in a space
            characterized by many layers of interrelated effects, whether
            ascribing this effect solely to biofuels is correct. If the
            rising price of agricultural commodities is a concern--as the
            catalyst for additional planting--it is now clear that oil
            prices have a profound effect on agricultural commodity
            markets. There are also market- and policy-mediated effects for
            electrification from coal and natural gas, hydrogen production
    ---------------------------------------------------------------------------
            from coal and natural gas, and hybrid production.

       The June 26 UC letter posits the argument that
            underestimating ILUC for biofuels is probably worse than
            overestimating ILUC since underestimating ILUC would create
            incentives for the overproduction of crop-based biofuel. The
            obvious implication is that without ILUC penalties for
            biofuels, we may face a runaway, unfairly advantaged crop-based
            biofuels industry with potentially serious land use impacts.
            This position seems out of touch with the realities of the U.S.
            transportation fuels industry. Roughly 86% of the Federal
            subsidies handed out to energy companies between 2005 and 2009
            will go to fossil fuel companies. A recent report out of Purdue
            University (by an author of the GTAP model) concluded that the
            price of oil is primarily responsible for the increased price
            of grains, including corn. The increasing price of agricultural
            commodities has put enormous strain on the conventional
            biofuels industry, suspending production at dozens of plants.
            The initial LCFS Policy Analysis published in August 2007
            recognized that the new, low-carbon transportation fuels needed
            in California are at a disadvantage because they ``compete on a
            very uneven playing field: the size, organization and
            regulation of these industries are radically different.'' It is
            difficult to see how enforcing even conservative indirect
            effects against biofuels, especially while not enforcing any
            indirect impacts against other fuels (as is the current LCFS
            trajectory), would unfairly incent crop-based biofuels. More
            likely, it will perpetuate the status quo, and continue
            California on a path toward (increasingly less sustainable) oil
            dependence. It is also instructive to point out, as the LCFS
            Policy Analysis did in August 2007, the duality of California's
            climate policy: to encourage investment and improvement in
            current and near-term technologies, while also stimulating
            innovation and the development of new technologies. To this
            end, it is imperative that the LCFS value and devalue all fuels
            equitably, so as not to exacerbate an already uneven playing
            field for alternative fuels.

       The fundamental assumption of the current ILUC argument--
            that using an acre of land in the U.S. for fuel will require
            almost an acre of crop development somewhere else--produces
            questionable results when applied to ``good'' public policy
            initiatives. For example, under the same assumption it is
            possible that setting aside land for the Conservation Reserve
            Program (CRP) creates more carbon emissions, because it takes
            agricultural acreage out of domestic food and feed production,
            which results in agricultural cultivation of grasslands and
            deforestation abroad. It is possible that other land protection
            policies, including national parks and wilderness areas, also
            fail the ``zero sum'' land use assumption because they take
            timber and agricultural land out of traditional production. By
            the ``zero sum'' standard, any land conservation policy in
            California or the United States exports pollution (or creates
            ILUC) elsewhere.

       Enforcing indirect impacts using the methodology envisioned
            by ARB may produce questionable market behaviors. ARB has
            discussed having a ``non zero'' land use change attribution
            (i.e., penalty) in the LCFS for certain broad categories of
            fuels (e.g., corn ethanol, biodiesel, cellulosic ethanol,
            etc.). However, it is generally accepted that different regions
            have different tolerances for increased agricultural
            production, as well as different indicators for agricultural
            products based on weather, supply/demand, annual plantings,
            etc. Yet, agricultural expansion in a region that can tolerate
            it pays the same ILUC price under the LCFS as expansion in
            regions that cannot tolerate intensification. And both farmers,
            irrespective of the efficiency or sustainability of their crop,
            pay for theoretical environmental damages abroad that they have
            no control over. The public policy proposal to penalize
            products for decisions and trends far outside of their sector
            and control is a major one, may not produce the desired
            behavioral effect, and should endure a substantial public
            review process.

       We are not sure that ARB is applying the principle of
            indirect effects enforcement in a balanced and consistent way.
            For example, ARB staff has made clear their inclination to
            debit all crop-based ethanol for ILUC, irrespective of the type
            or location of the land used for production. However, on the
            subject of tar sand petroleum use by oil companies, ARB staff
            has implied only that oil companies will be debited if they use
            tar sands in California. Put another way, the penalty for
            biofuels is automatic while the penalty for oil can be avoided
            by redistributing its product. This creates obvious compliance
            inequities, but also questionable climate accounting in the
            marketplace. Oil companies will simply use lighter crude in
            California to escape penalty under the LCFS. But this decision
            will short supply of light crude elsewhere and increase the
            demand for tar sands and other resource intensive crude with
            obvious climate impacts. Requiring oil companies to account for
            tar sands use abroad is the definition of a market-mediated
            effect. Yet ARB seems more inclined to enforce market-mediated
            effects against ethanol, for land use change, than indirect
            effects against oil companies for heavy crude and tar sands.

        To be clear, the renewable fuels industry supports the ongoing
    effort to better understand the indirect effects of the energy choices
    we make. But the enforcement of indirect effects of any kind, given the
    complexity and relative infancy of the field, must be done carefully
    and in a balanced way. Some members of the UC scientific community want
    to include ILUC in the LCFS. But this is not a consensus position. In
    addition to the 27 signatories of the June 24 letter to ARB, Dr.
    Michael Wang of Argonne National Laboratory, one of the foremost
    experts in lifecycle carbon assessment (LCA) field and author of the
    GREET model being used as the framework for the LCFS, recently stated,
    ``indirect land use changes are much more difficult to model than
    direct land use changes. To do so adequately, researchers must use
    general equilibrium models that take into account the supply and demand
    of agricultural commodities, land use patterns, and land availability
    (all at the global scale), among many other factors. Efforts have only
    recently begun to address both direct and indirect land use changes . .
    . [w]hile scientific assessment of land use change issues is urgently
    needed in order to design policies that prevent unintended consequences
    from biofuel production, conclusions regarding the GHG emissions
    effects of biofuels based on speculative, limited land use change
    modeling may misguide biofuel policy development.'' \4\ The signatories
    of the June 24 letter expressed similar concerns.
    ---------------------------------------------------------------------------
        \4\ See http://www.transportation.anl.gov/pdfs/
    letter_to_science_anldoe_03_14_08.pdf.
    ---------------------------------------------------------------------------
        The UC letter signatories dismiss the rationale that ILUC be left
    out of the LCFS at this time based, in essence, on the assertion that
    ILUC exists. As stated, all fuels and products have indirect carbon
    impacts. Yet, zero may in fact be the right number for ``indirect
    effects'' for all fuel pathways in the first version of the LCFS from a
    public policy perspective if: (1) ARB and UC cannot enforce
    scientifically defensible numbers because of the lack of verifiable or
    reliable data or an incomplete understanding of the full spectrum of
    indirect effects across all fuel pathways; and/or, (2) there are
    serious unanswered public policy questions about the merits of
    enforcing indirect effects in a performance-based carbon regulation;
    and, (3) there is no accounting for the foregone public benefits of
    domestic and international biofuel development, or for the export of
    pollution to other locations on a strict LCFS policy with high
    penalties for domestically produced biofuels. To this latter point, it
    is worth noting in any discussion about market-mediated, indirect
    effects the potential to destabilize the advanced biofuels sector with
    overly aggressive or inequitable compliance metrics against
    conventional biofuels. It is well understood that conventional biofuels
    are a cornerstone for the development of advanced biofuels, which
    includes infrastructural, political, market acceptance and investment
    risk considerations. Enforcing additional compliance metrics against
    conventional biofuels will not accelerate the commercialization of
    advanced biofuels.
        Notwithstanding the challenges ahead, our industry is eager to be
    an early actor under the regulation and looks forward to the ongoing
    formulation of the LCFS rule. We strongly agree with the UC researchers
    that the challenge that comes with ushering in new technical, economic,
    social and environmental areas of inquiry and action is of balancing
    further study with implementation. But we do not agree that throwing
    uncertain numbers at selected fuels under the LCFS will create a
    positive outcome for either the environment or the LCFS policy itself.
        We would be happy to address questions or concerns you may have,
    and appreciate your leadership on this important endeavor.
                Sincerely,

    Brooke Coleman,
    Executive Director,
    New Fuels Alliance;

    Vinod Khosla,
    Khosla Ventures;

    Carlos Riva,
    Chief Executive Officer,
    Verenium Corporation;

    Neil Koehler,
    Chief Executive Officer,
    Pacific Ethanol;

    Colin South,
    President,
    Mascoma Corporation;

    Necy Sumait,
    Executive Vice President,
    BlueFire Ethanol;

    Mitch Mandich,
    Chief Executive Officer,
    Range Fuels, Inc.;

    Mark Noetzel,
    President & CEO,
    Cilion, Inc.;

    Bill Honnef,
    Co-Founder, Senior Vice President,
    VeraSun Energy;

    Jef Sharp,
    Executive Vice President,
    SunEthanol;

    Patrick R. Gruber,
    Chief Executive Officer,
    Gevo Incorporated;

    Dr. Frances H. Arnold,
    Dickinson Professor of Chemical Engineering and Biochemistry,
    California Institute of Technology,
    Co-Founder, Gevo, Inc.;

    Ken DeCubellis,
    Chief Executive Officer,
    Altra Biofuels;

    Randy Kramer,
    Founder & President,
    KL Energy;

    Jeff Passmore,
    Executive Vice President,
    Iogen Corporation;

    Steve Gatto,
    Chief Executive Officer,
    BioEnergy International, LLC;

    John Cruikshank,
    Principal,
    New Planet Energy, LLC;

    Michael Raab,
    President,
    Agrivida, Inc.;

    David R. Rubenstein,
    Chief Operating Officer,
    California Ethanol + Power LLC;

    Connie Lausten,
    V.P. Regulatory and Legislative Affairs,
    New Generation Biofuels;

    James P. Imbler,
    CEO & President,
    ZeaChem, Inc.;

    Larry Lenhart,
    Chief Executive Officer,
    Catilin Inc.;

    Nathalie Hoffman,
    CEO & Managing Member,
    California Renewable Energies, LLC;

    Jeff Stroburg,
    Chief Executive Officer,
    Renewable Energy Group;

    David Morris,
    Vice President,
    Institute for Local Self Reliance (ILSR);

    Dr. Bruce Dale,
    Professor, Department of Chemical Engineering & Materials Science,
    Michigan State University;

    Jeff Plowman,
    Executive Director,
    Sustainable Biodiesel Alliance;

    Rahul Iyer,
    Chief Marketing Officer,
    Primafuel, Inc.;

    Richard W. Hamilton,
    President & CEO,
    Ceres, Inc.;

    Richard Gillis,
    President & Chief Executive Officer,
    Energy Alternative Solutions, Inc.

    cc:
    Governor Arnold Schwarzenegger,

    David Crane, Special Advisor for Jobs & Economic Growth, Office of
    Governor Schwarzenegger,

    Linda Adams, Secretary, Cal-EPA,

    A.G. Kawamura, Secretary, California Department of Food & Agriculture,

    Mike Scheible, Deputy Director, Air Resources Board,

    Karen Douglas, Commissioner, California Energy Commission.
                                   Exhibit 6
    April 15, 2009

    Mary D. Nichols,
    Chairwoman,
    California Air Resources Board,
    Headquarters Building,
    1001 ``I'' Street,
    Sacramento, CA.

        Dear Chairwoman Nichols,

        We, the undersigned advanced and cellulosic biofuel companies, are
    writing to provide our collective comments on the Proposed Regulation
    to Implement the Low Carbon Fuels Standard (LCFS).
        First, we commend the state of California for its exemplary vision
    and leadership in developing energy policies that aspire to reduce
    greenhouse gas emissions, decrease our reliance on fossil fuels, and
    stimulate the economy. The Initial Statement of Reasons (ISOR) says the
    LCFS is designed to ``. . . create a lasting market for clean
    transportation technology, and stimulate the production and use of
    alternative low-carbon fuels in California.'' We agree that these
    policy goals are both admirable and absolutely critical to the future
    of our nation. However, we are greatly concerned that because the draft
    regulation creates an unlevel playing field for both first- and second-
    generation biofuels, these goals ultimately will not be reached.
        Because the LCFS is structured as a performance-based regulation,
    fair determination of a fuel's lifecycle carbon intensity is critically
    important. Lifecycle analysis serves as the foundation of any
    performance-based, technology neutral regulation. As such, it is
    essential that all regulated fuels are evaluated using the same
    analytical boundaries. Unfortunately, the Air Resources Board's (ARB)
    analysis uses asymmetrical boundaries to assess the carbon intensity of
    various fuels. Specifically, biofuels from any feedstock grown on land
    are penalized for a highly uncertain and unproven market-mediated
    effect known as indirect land use change, while petroleum and other
    fuel types are assumed not to cause any indirect carbon effects or
    market-mediated impacts. One important indirect petroleum effect that
    must be acknowledged is the long-term impact of not immediately
    beginning to diversify away from fossil fuels. Failure to transition
    away from fossil fuels will result in increased demand for conventional
    oil, which depletes those sources faster today and accelerates the need
    for higher greenhouse gas fossil hydrocarbons (e.g., tar sands and oil
    shale) tomorrow.
        Supporters of enforcing indirect land use effects against biofuel
    often suggest that this policy decision is necessary to help encourage
    advanced biofuel production. In fact, in a November 2008 news article,
    ARB member Dan Sperling stated, ``I really think these biofuels
    producers should appreciate that this is going to help them, especially
    those that use cellulosic or biomass feedstocks.'' \1\ We have a
    distinctly different point of view. We are concerned that the inclusion
    of indirect effects penalties for biofuels, and other inequalities in
    the LCFS, will erode investor confidence and market certainty for both
    first and second-generation biofuels. Contrary to the belief held by
    some, producers of next generation biofuels such as cellulosic ethanol
    are not supportive of selectively including indirect effects in the
    LCFS. The successful development, commercialization, and sustained
    production of second-generation biofuels is largely contingent upon
    continued market opportunities for the first generation of biofuels.
    Securing financing for second-generation biofuels projects in today's
    economy is challenging enough; but the negative signal sent to
    potential investors by the enforcement of selective and questionable
    penalties against biofuels may be insurmountable.
    ---------------------------------------------------------------------------
        \1\ Lamb, Celia. ``Biofuels makers object to state's proposed
    standards for cleaner fuel.'' Sacramento Business Journal. November 7,
    2008.
    ---------------------------------------------------------------------------
        Artificially limiting the use of first generation biofuels may
    inadvertently close the door to future renewable fuels. Over the past
    30 years, the first-generation ethanol industry has established robust
    transportation and storage infrastructure; cultivated an investment
    base and created financial networks; advocated policies that create
    market certainty; and, more generally, raised the nation's collective
    experience level related to introducing renewable fuels into a market
    dominated by fossil fuels. It is also critical to understand that some
    conventional biofuel companies are also some of the largest investors
    in cellulosic ethanol. We view the transition to second-generation
    biofuels as being evolutionary rather than revolutionary.
        Many of us were signatories of an October 2008 letter to ARB
    Chairwoman Mary Nichols from second-generation biofuels companies,
    researchers, and organizations. The letter clearly stated, ``. . .we do
    not agree that throwing uncertain numbers at selected fuels under the
    LCFS will create a positive outcome for either the environment or the
    LCFS policy itself.'' \2\ The letter further suggests, ``. . . no model
    today comes close to capturing the interplay of economic,
    institutional, technological, cultural and demographic variables
    inherent with quantifying the indirect impact of any fuel.'' Our
    position on these issues has not changed.
    ---------------------------------------------------------------------------
        \2\ Letter to Chairwoman Mary Nichols. http://www.arb.ca.gov/lists/
    lcfs-lifecycle-ws/46-arb_luc_final.pdf.
    ---------------------------------------------------------------------------
        ARB's use of vastly different boundaries for different fuels is
    clearly demonstrated by the cursory assessment of the direct land
    impacts of crude oil operations. ARB examined the direct land impacts
    of only California oil fields, while ARB's boundaries for biofuels
    analysis are global in scope and include indirect carbon effects. ARB's
    analytical boundary for oil's direct land impacts might be justifiable
    if California produced all of the oil it consumes. However, more than
    60% of the oil consumed in California is imported from outside of the
    state. Further, there is no evidence that ARB conducted a comprehensive
    analysis of the indirect, market-mediated impacts of oil imported or
    produced in the state. Preliminary analysis presented by Life Cycle
    Associates to ARB in January indicated several potential sources of
    indirect and direct GHG emissions associated with oil production that
    have been overlooked in ARB's analysis and most other traditional
    lifecycle analyses. Examples of these emissions include methane from
    flaring, methane from tailing ponds, and emissions associated with some
    refinery byproducts. The report said that other fuels could--and
    should--be run through economic models and other analytics to test for
    indirect effects. This has not been done.
        Next-generation biofuels producers agree with the 111 scientists
    and academics from California and other states who recently submitted a
    letter to Governor Arnold Schwarzenegger, stating, ``Leaving aside the
    issue of whether these [indirect] effects can be predicted with
    precision or accuracy, or whether such a penalty is appropriate for the
    LCFS, it is clear that indirect effects should not be enforced against
    only one fuel pathway.'' The letter's signatories, including members of
    National Academies of Sciences and Engineering, further stated that the
    proposal ``. . . creates an asymmetry or bias in a regulation designed
    to create a level playing field. It violates the fundamental
    presumption that all fuels in a performance-based standard should be
    judged the same way.'' \3\
    ---------------------------------------------------------------------------
        \3\ Letter to Gov. Arnold Schwarzenegger. http://www.arb.ca.gov/
    lists/lcfs-lifecycle-ws/74-phd_lcfs_final_feb_2009.pdf.
    ---------------------------------------------------------------------------
        We think it is important to recognize that due to the highly
    uncertain nature of indirect land use change modeling and the lack of
    consensus on methodology, European institutions recently decided to
    postpone inclusion of indirect land use change as a factor in
    determining the carbon intensity of biofuels in the European Union (EU)
    Renewable Energy and Fuels Quality Directive.\4\ Rather, the EU
    institutions directed the initiation of a 2 year study aimed at gaining
    a better understanding of the land impacts of biofuels and methods for
    minimizing land effects. We believe ARB should consider a similar 2
    year study period and coordinate fully with EU officials and U.S.
    Environmental Protection Agency to develop a methodology for analyzing
    indirect effects that is uniform, validated, and scientifically sound.
    ---------------------------------------------------------------------------
        \4\ See http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP/
    /TEXT+TA+P6-TA-2008-0613+0+DOC+XML+V0//EN&language=EN#BKMD-27.
    ---------------------------------------------------------------------------
        We are also greatly concerned by the ISOR's premature presentation
    of insufficient and questionable analysis on the land use change
    impacts of cellulosic feedstocks. In the ISOR, cellulosic crop-based
    biofuels are assumed to induce indirect land use change emissions of 18
    g CO2-eq./MJ. There is very little research and virtually no
    modeling to support this initial conclusion. In fact, ARB's indirect
    land use change assessment for cellulosic biofuels relies almost
    entirely on a few pages of information from an unpublished, un-reviewed
    paper by Purdue University researchers. The Purdue authors themselves
    characterize the analysis as a ``very rough picture'' of the potential
    land impacts of cellulosic feedstocks. While ARB characterizes the
    cellulosic indirect land use change value as preliminary in nature,
    publishing the result at all will establish a view of cellulosic
    biofuels that may be significantly disconnected from reality. We also
    question ARB's selection and use of specific assumptions. For example,
    ARB assumes average cellulosic feedstock ethanol yields will be 250
    gallons/acre. Published literature and data from field trials suggest
    commercial-scale ethanol yields will be much higher.
        In closing, we strongly encourage the ARB to continue to refine and
    improve its lifecycle modeling framework. We also believe the
    methodology and ARB's results must be further peer-reviewed by a multi-
    disciplinary group of disinterested economists, climate change
    scientists, soil scientists, plant biologists, and other experts. This
    has not yet been done. We strongly recommend the delay of inclusion of
    indirect effects in the LCFS regulation until more appropriate
    analytical tools are developed and rigorous peer review is conducted.
    Additionally, if ARB is truly committed to fairly enforcing market-
    mediated effects on a level playing field, the Board should immediately
    initiate a comprehensive research effort that examines the indirect
    effects of all fuels.
        We sincerely appreciate the opportunity to provide comment and look
    forward to continuing to work with ARB to develop a workable policy
    that achieves the state's ambitious, but attainable, carbon reduction
    goals.
                Sincerely,

    Abengoa Bioenergy,
    BioEnergy International, LLC,
    BlueFire Ethanol Fuels, Inc.,
    California Ethanol & Power, LLC,
    Ceres, Inc.,
    Coskata,
    Iogen Corporation,
    Novozymes,
    Pacific Ethanol,
    Qteros, Inc.,
    Verenium,
    ZeaChem Inc..
                                   Exhibit 7
    April 21, 2009

    Mary D. Nichols, Chairman,
    California Air Resources Board,
    Headquarters Building,
    1001 ``I'' Street,
    Sacramento, CA.

    RE: Investor Concerns About Enforcement of Indirect Effects in the CA
    LCFS

        Dear Chairman Nichols,

        As members of the California clean energy investment community, we
    appreciate the opportunity to comment on the proposed California Low
    Carbon Fuel Standard (LCFS), and specifically, to discuss the critical
    issue of how to address concerns about indirect effects under the
    regulation.
        As a general matter, we commend your leadership and that of the
    Schwarzenegger Administration in acting to reduce the carbon intensity
    of California transportation fuels. Most importantly, we support your
    focus on a performance driven regulation that provides important
    predictability for clean fuel investors, and attempts to avoid picking
    winners and losers. As leading investors in advanced biofuels and other
    transportation solutions, we are sensitive to the need to promote the
    lowest carbon and most sustainable solutions. In reviewing the LCFS
    proposal dated March 5, 2009 we noted that the Air Resources Board
    (ARB) plans to score the different compliance fuels based on their
    direct ``cradle to grave'' carbon effects. It also appears that ARB
    plans to enforce an additional carbon penalty on biofuels for
    ``indirect land use change (iLUC)'' based on newly evolved economic
    modeling. We the undersigned, have significant concerns about the
    current use of iLUC and its selective application to biofuels.
        As investors in a range of low carbon fuel technologies, we want to
    ensure that fuel options are treated equally and scored with the same
    level of accuracy, including the petroleum fuel baseline. This is
    important so that we can invest with a clear understanding of the
    performance of a particular fuel option under an LCFS. Indirect effects
    of all kinds, not just land use change, may have significant impacts on
    the footprint of each fuel option and its viability under an LCFS. Our
    primary concern is that if indirect effects are included in the
    regulation that they be studied with equal scope and effort across all
    fuels before they are applied to any fuels. The current approach, which
    selectively adds iLUC to biofuels, reduces the carbon benefits of both
    advanced and conventional biofuels, but leaves significant uncertainty
    about how the other alternatives will be treated under the regulation
    and whether the number assigned to biofuels will hold up under further
    review. This will likely have a significant chilling effect on the
    development of lower carbon fuels, including advanced biofuels.
        At a basic level, we also have increasing concerns about the
    validity of current indirect effects modeling--specifically for ``land
    use change'', which is the only effect currently modeled for the LCFS.
    According to a wide range of scientific experts in the field, many of
    whom expressed their concerns about the selective enforcement of
    indirect effects in a letter dated March 2, the underpinnings of the
    current iLUC methodology are problematic and may be proved faulty under
    closer scrutiny.
        First, we are concerned that the model itself--called GTAP--is not
    yet peer-reviewed for its new application as a predictive carbon model,
    and that GTAP has a documented history of being imprecise. ``Indirect
    land use change'' is an outcome derived by adding a predetermined
    amount of biofuel demand to a static, preset economic model, which in
    turn projects the potential ``price induced'' expansion of the
    agricultural sector onto additional land. It is a useful academic
    exercise, but as a price model it cannot account for the profit margins
    that drive real world decision making. As a result, the model is likely
    to over estimate effects that in reality would be mitigated by market
    forces, or produce estimates that in many cases are simply wrong. For
    example, in prior applications of the GTAP methodology, the model
    predicted changes in land use between 2001 and 2006 that were actually
    the opposite of the real-world changes observed over time.\1\
    Unfortunately, ARB is currently relying on this overly simplified
    modeling methodology to assign indirect land use change penalties that
    will have very real commercial implications. It is our belief that the
    modeling methodology needs to be improved and further validated to a
    point where the level of uncertainty is more akin to other regulatory
    standards. For example, ARB's on-road emissions model (EMFAC) has been
    validated by real world carbon monoxide data based on ambient air
    monitors in tunnels. Conversely, there has been little attempt to
    validate the inputs or outputs used for the GTAP analysis. There are
    indications that some of their assumptions may be wrong. For example,
    GTAP assumes that the productivity of new land being converted is 40%
    less than existing land. However, this assumption does not square will
    actual yield and productivity data coming out of Brazil.
    ---------------------------------------------------------------------------
        \1\ In an earlier analysis of the impact of biofuels on U.S. land
    use patterns, researchers at Purdue using GTAP concluded the harvested
    area for coarse grains like corn would increase 8.3% from 2001 to 2006,
    U.S. harvested area for oilseeds like soybeans would decline 5.8%, and
    forested area would decline 1.5% during the same period. In actuality,
    coarse grain harvested area declined by 2%, oilseed area increased by
    0.5%, and forested area increased by 0.6% from 2001 to 2006.
    ---------------------------------------------------------------------------
        Second, we are concerned that the bulk of the modeling to date has
    been focused on a single fuel option--biofuel. This modeling exercise
    is being used to increase the carbon score of cellulosic ethanol by 80
    percent, and conventional biofuels by 40-200% depending on the type of
    feedstock. It appears that the oil baseline, along with all other
    alternatives including natural gas, hydrogen, and electrification are
    assumed to have no indirect effects, even though each fuel certainly
    has ``price induced'' carbon effects. For instance, if more natural gas
    is used for transportation then not only will its price rise, but it
    must be replaced in the electricity portfolio--some percentage of which
    is likely to be coal. We believe that any estimates of indirect effects
    need to be evenly applied across fuel options. Each fuel will have a
    different set of indirect carbon effects. In some cases those indirect
    effects will consist primarily of a single impact such as land use
    change, while in others it will be the sum of many small effects, but
    the science must be applied with equal diligence across all compliance
    and baseline options.
        Some groups have suggested that the current iLUC modeling would
    help advanced biofuels. This claim is not accurate. Selective indirect
    effects enforcement against biofuels makes all biofuels, including
    advanced biofuels, less competitive against the baseline and other
    alternatives. As investors we are also concerned because selective
    enforcement adds risk and uncertainty to the advanced biofuels sector
    by: (a) destabilizing the conventional biofuel sector, which continues
    to build the infrastructure and support the technological development
    that is necessary to allow advanced biofuels to reach
    commercialization; (b) institutionalizing a regulatory bias against all
    biofuels and sending mixed regulatory signals to the market, which
    amplifies market risk and will chill investment in advanced biofuels;
    (c) artificially limiting the type of feedstock available to advanced
    biofuel producers, which limits the scalability of emerging advanced
    biofuel companies. It is not enough to suggest that advanced biofuel
    companies are helped by the LCFS as long as their carbon scores are
    lower than that of petroleum. Their advantage is artificially
    diminished by selective application of indirect effects. Furthermore,
    investments are based on a much more diverse set of metrics inclusive
    of regulatory bias, politics, market barriers, science, infrastructure
    and other risk. In general, asymmetrical application of indirect effect
    penalties exacerbates investment risk in all biofuels.
        We are also aware of the argument that an LCFS without indirect
    land use change ignores a very real effect of biofuels. However, we
    feel strongly that zero is not the right number for oil or any other
    alternative either. Indirect effects come as a consequence of a myriad
    of worldwide economic, political and social variables, and should not
    be prematurely and selectively applied to a single option in a
    performance regulation. An LCFS without indirect effects (i.e., based
    on direct effects) captures the full well-to-wheels carbon emissions of
    producing and using various fuels, including the land converted for
    production of biofuel feedstock. Delaying the assignment of indirect
    effects will not lead to massive investment in higher carbon
    conventional biofuels, as some have feared. Investor time horizons are
    long enough that the risk of future penalties for iLUC will be taken
    into account.
        Our primary concern as investors is that the LCFS provides a fair
    and enduring set of standards that regulate all fuels on a level
    playing field. Selective enforcement of indirect effects creates an
    asymmetry that will have unintended consequences, and creates exactly
    the kind of regulation that makes investors wary. We believe that an
    LCFS using direct effects in conjunction with an economy wide carbon
    regulation such as AB32 has the capacity to address indirect effects as
    direct effects through clear management of unregulated imports.
    However, we support several additional strategies to address concerns
    about indirect effects: (1) a multi-disciplinary assessment of the
    indirect, market-mediated carbon effects of all fuels; (2) ongoing
    improvement of the treatment of direct land use under the GREET model;
    (3) the design and implementation of a regulatory process by which all
    fuel producers, including fossil fuel companies, customize the carbon
    impacts of their fuels, including land intensity. The apparent
    alternative--using biofuels as a pathway to stretch the traditional
    carbon assessment boundaries into indirect effects--will be
    counterproductive for the economic and environmental interests of State
    of California and will undermine investments in viable near-term
    solutions to petroleum dependence and climate change.
        We appreciate the opportunity to comment on this important
    regulation and look forward to providing any additional information you
    might need.
                Sincerely,

    [alphabetical listing]

    Andrew Friendly,
    Principal, Advanced Technology Ventures;

    Erik Straser,
    Partner, Mohr Davidow Ventures;

    Jason Matlof,
    Partner, Battery Ventures;

    Josh Green,
    Partner, Mohr Davidow Ventures;

    Kelsey B. Lynn,
    Principal, Firelake Capital Management LLC;

    Martin L. Lagod,
    Managing Director, Firelake Capital Management LLC;

    Maurice Gunderson,
    Senior Partner, CMEA Capital;

    Paul Holland,
    General Partner, Foundation Capital;

    Steve Golby,
    Partner, Venrock;

    Will Coleman,
    Partner, Mohr Davidow Ventures.
                                   Exhibit 8
    Environmental and Energy Study Institute
    March 16, 2009

    Mary D. Nichols, Chairwoman,
    California Air Resources Board,
    Headquarters Building,
    1001 ``I'' Street,
    Sacramento, CA.

        Chairwoman Nichols:

        Reducing greenhouse gas emissions from transportation fuels is an
    important and urgent challenge for both California and our nation. It
    is one of the many hurdles that our nation will need to overcome if we
    are to address the climate crisis effectively and quickly. We at the
    Environmental and Energy Study Institute commend the staff of the
    California Air Resources Board for its thoughtful effort and leadership
    to establish a low carbon fuel standard--for the State of California
    and as a model for the nation.
        However, we are writing to express our concern that the excellent
    work the staff has done to assess the direct lifecycle carbon emissions
    of various fuels, based upon scientifically sound and generally
    accepted methodologies, is significantly undermined by the inclusion of
    indirect carbon emissions from land use changes attributed to biofuels
    production, about which there is very little consensus in the
    scientific community. Scientists are only just beginning to explore the
    indirect relationships (if any) between biofuels production in the U.S.
    and land use changes around the world. To base such a critical policy
    decision upon such an uncertain and unsettled body of knowledge inserts
    a significant, unfounded bias against a class of fuels which may offer,
    in the final analysis, great promise in meeting our nation's pressing
    climate and energy challenges.
        Traditional lifecycle assessments include only what have come to be
    known as `direct emissions'. Direct emissions include the carbon
    contents of the fuel itself, as well as the greenhouse gases released
    during each stage of production (from ``well to wheels''). Direct
    emissions are measurable, attributable, and described in well-tested
    models (such as the GREET model).
        ``Indirect emissions'', on the other hand, are those emissions that
    are assumed to occur somewhere in the world as a result of general
    market forces exerted by the production of a particular kind of fuel--
    in this case, the greenhouse gas emissions thought to be released from
    tropical deforestation and other land use changes as an indirect,
    market-driven result of farmland in the U.S. being diverted away from
    food or feed crops to growing biofuel crops. Unlike direct emissions,
    indirect emissions cannot be observed, measured in situ or attributed
    to particular production chains.
        The CARB staff is calculating these indirect emissions using a
    general equilibrium model to estimate aggregate emissions from land use
    change at the global level due to the impact of U.S. biofuel production
    on global markets. General equilibrium models simulate changes and
    trends in commodity production by assuming a closed system that seeks
    economic `equilibrium' as determined by regional constraints of supply
    and demand. These models, however, are especially sensitive to the
    assumptions underlying the inputs and processes included in the model.
    In particular, assumptions regarding the supply of agricultural land,
    the availability of marginal lands, farmer behavior, agricultural
    production practices, economic value and use of biofuel co-products,
    and competing uses for land and natural resources, substantially affect
    model results. Determining the `right' assumptions and assigning values
    can be a highly subjective process over which scientists, policymakers,
    and stakeholders frequently disagree.
        Confounding the problem further is the difficulty of determining
    additionality. Even if one assumes that biofuel production is the
    proximate cause of a certain amount of deforestation, one cannot assume
    that those forests would have otherwise remained intact in the absence
    of biofuel production. There are many causes of deforestation and land
    use change--timber demand, livestock grazing, mining, urban sprawl,
    global food and feed demand, and subsistence activities. People
    continually seek to realize the highest value from the land. If
    biofuels are removed as a market driving factor, other factors will
    likely fill the void. In sum, using these models to calculate indirect
    emissions remains a highly subjective and speculative process,
    dependent on a number of a priori assumptions that bias the outcome.
        There is another, more fundamental issue with including indirect
    emissions in the LCFS assessment: this concerns the precedent of
    holding an industry in the U.S. responsible for activities (real or
    supposed) undertaken by people across distant borders in other
    sovereign nations. If this standard is to be applied to biofuels, in
    fairness, should it not also be applied to the assessment of fossil
    fuels, hydrogen, and electricity? On a broader level, is this a new
    standard to which other industries and public policy decisions should
    be held? The analysis of indirect effects could be applied to regulate
    against a host of other economic and social activities. All large scale
    activities that use scarce resources, affect markets, or influence
    economic or social behavior are likely to have some distant, indirect
    effects.
        Global deforestation, conversion of native grasslands and
    shrublands, and ecosystem degradation are very real problems, with
    impacts on biodiversity, water security, and the welfare of indigenous
    peoples. These land use changes have been accelerating for decades,
    driven by many factors--long before the U.S. biofuel industry came on
    the scene. The resulting greenhouse gas emissions are huge, amounting
    to over 18% of total global emissions. The international community must
    work together with urgency and speed--through international
    negotiations, treaties, and financial and technical assistance--to
    prevent further loss of forests and ecosystems across the globe.
        Including indirect emissions from land use change in the LCFS,
    however, is not likely to promote the stable climate and healthy
    ecosystems that we all seek. Instead, it will only reduce the political
    legitimacy of the LCFS as a fair and objective tool for comparing fuel
    options and unfairly penalize an industry that offers great promise for
    addressing the nation's climate and energy challenges. If the LCFS is
    to be an objective, technology-neutral assessment tool, it must treat
    all fuels equitably, using consistent, generally accepted, scientific
    criteria and methods. Otherwise, it will merely serve to reinforce the
    predispositions of the modelers.
                Sincerely,
                [GRAPHIC] [TIFF OMITTED] 51922.011

    Carol Werner,
    Executive Director, Environmental and Energy Study Institute.

    cc:

    Hon. Arnold Schwarzenegger, Governor of California,

    David Crane, Special Advisor for Jobs and Economic Growth, Office of
    Governor Schwarzenegger,

    Linda Adams, Secretary, California Department of Food & Agriculture,

    Mike Scheible, Deputy Director, Air Resources Board,

    Karen Douglas, Chairwoman, California Energy Commission.
                                   Exhibit 9
    Iowa State University of Science and Technology
    April 6, 2009
    Mary D. Nichols, Chairwoman,
    c/o Clerk of the Board,
    Air Resources Board,
    Headquarters Building,
    1001 I Street,
    Sacramento, CA.

        Dear Ms. Nichols:

        California's proposed Low-Carbon Fuel Standard (LCFS) is one of the
    nation's first attempts to implement greenhouse gas (GHG) policy. We
    hope the policy that emerges is not merely a first attempt at
    regulation but ultimately proves to be an effective mechanism for GHG
    reduction because it will set precedent for the nation and possibly the
    rest of the world. We are concerned that as currently proposed the LCFS
    will be ineffective in reducing greenhouse gas emissions as well as
    inadvertently slowing the deployment of technologies that can reduce
    our reliance on petroleum and other fossil fuels.
        Fundamentally, the LCFS fails to address the fact that all economic
    activity generates GHG emissions. Under the proposed rules, only
    transportation fuels are held accountable for the burdens of carbon
    that are discharged into the atmosphere. Although no national inventory
    has been completed on the carbon burdens of the various goods and
    services generated by our economy, they are not difficult to estimate
    on the basis of megagrams (metric tons) of carbon dioxide equivalence
    per $1000 of gross domestic product (Mg CO2/$1,000 GDP). For
    example, steel, concrete, and corn ethanol all produce about 2 tons of
    carbon dioxide per $1,000 GDP. Beef from corn-fed cattle is 4 tons,
    gasoline from petroleum is 6 tons, and electricity from coal is almost
    10 tons. Clearly, products and services other than transportation fuels
    place significant carbon burdens on the atmosphere, which the LCFS does
    not address. Although some would argue that it is a start, we must not
    let it be a false start, slowing the ultimate goal of actually reducing
    the amount of greenhouse gases in the atmosphere. Recent proposals to
    include indirect land use change (ILUC) considerations in the
    calculation of lifecycle GHG emissions for transportation fuels is an
    attempt to correct for the shortcomings of LCFS as originally
    formulated, but it will likely prove a false start in meeting the
    challenge of global climate change.
    [GRAPHIC] [TIFF OMITTED] 51922.012

        All economic activity generates greenhouse gas emissions. The Low-
    Carbon Fuel Standard does not effectively address the ultimate sources
    of carbon being discharged into the atmosphere. Source: Brown and
    Gifford (Iowa State University).
        As described last year by Searchinger et al.\1\ and Fargione et
    al.,\2\ one possible outcome of a LCFS that excludes other kinds of
    economic activities in the calculation of GHG emissions is a net
    increase in GHG emissions. They developed scenarios for corn ethanol
    production that assumed the resulting corn deficit in world markets
    would be filled by farmers converting rainforests and grasslands to
    agricultural lands. Depending upon the assumptions employed for this
    land conversion, the net carbon dioxide emissions potentially could
    overwhelm the emissions saved by using biofuels in place of gasoline.
    Both groups of researchers argue that this deficit, although not
    directly the result of biofuels agriculture, should be made the
    responsibility of ethanol producers. To many, this so-called indirect
    land use change argument seems eminently reasonable in the face of
    environmental policy that only holds certain sectors of the economy
    responsible for GHG emissions.
    ---------------------------------------------------------------------------
        \1\ Searchinger, T., Heimlich, R., Houghton, R. A., Dong, F.,
    Elobeid, A., Fabiosa, J., Tokgoz, S., Hayes, D., and Yu, T.-H. (2008)
    Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through
    Emissions from Land-Use Change, Science 319 (5867) pp. 1238-1240;
    originally published in Science Express, 7 February, DOI: 10.1126/
    science.1151861.
        \2\ Fargione, J., Hill, J., Tilman, D., Polasky, S., Hawthorne, P.
    (2008) Land Clearing and the Biofuel Carbon Debt, Science 319 (5867)
    pp. 1235-1238; originally published in Science Express, 7 February,
    DOI: 10.1126/science.1152747.
    ---------------------------------------------------------------------------
        On the other hand, one has to question the wisdom of adopting a
    policy that so grossly distorts responsibility for net GHG emissions
    that it is unlikely to be effective in reducing them. The problem with
    using ILUC to assign responsibility for net GHG emissions is of two
    kinds. First, field research demonstrates that GHG emissions associated
    with land-use change are driven by many cultural, technological,
    biophysical, political, economic, and demographic forces rather than by
    a single crop market.\3\ Accordingly, it is virtually impossible for
    the biofuels industry to affect the course of land use change outside
    the value-chain of its own feedstock suppliers. This is made abundantly
    clear in comparing the 20 million acres of cropland that has been
    devoted to ethanol production in the U.S. over the last decade to the
    500 million acres of Brazilian rainforest that disappeared over a
    similar period of time.\4\ The inclusion of ILUC in calculating the
    LCFS will have virtually no influence on the course of land use change
    in the developing world or the associated GHG emissions. On the other
    hand, the nascent biofuels industry, if saddled with the GHG emissions
    generated by other sectors of the world's economy, will not be able to
    compete in energy markets.
    ---------------------------------------------------------------------------
        \3\ Kline, K.L. and Dale, V.H. (2008) Biofuels: Effects on land and
    fire; Letter to the editor, Science 321, 199.
        \4\ Glantz, M.H., Brook, A.T., Parisi, P. (1997) Rates and
    Processes of Amazon Deforestation, National Center for Atmospheric
    Research, available on the Web: http://www.ccb.ucar.edu/rates/
    rateschart.html (accessed April 2, 2009).
    ---------------------------------------------------------------------------
        Second, a GHG policy that makes exceptions for some sectors of the
    economy and shifts the associated carbon burdens to other sectors is
    likely to encourage further growth in GHG emissions. As the Searchinger
    and Fargione studies revealed, burdening biofuels agriculture while
    exempting food agriculture could have the effect of encouraging
    unsustainable land stewardship in the developing world with the
    perverse outcome of increasing net GHG emissions around the world. All
    economic activity should be directly responsible for the GHG emissions
    emanating from them if this situation is to be avoided.
        We encourage the California Air Resources Board (CARB) to consider
    more effective mechanisms than ILUC for controlling GHG emissions
    including application of a low carbon standard to all goods and
    services in our economy, both domestically produced and imported. In
    this way we can reduce GHG emissions while encouraging development of
    biofuels technologies, which have so much potential to reduce
    dependence on imported petroleum and help mitigate global climate
    change.
                Sincerely,

    Robert C. Brown,
    Director, Bioeconomy Institute,
    Anson Marston Distinguished Professor in Engineering,
    Gary and Donna Hover Chair in Mechanical Engineering,

    Hans van Leeuwen, DEng, BCEE, PE,
    Professor of Environmental and Biological Engineering;

    Richard M. Cruse,
    Professor and Director Iowa Water Center;

    John F. McClelland,
    Senior Physicist and Molecular Analytics Group Leader,
    IPRT/Ames Laboratory--USDOE;

    Theodore J. Heindel,
    Professor and Associate Chair for Academic Affairs,
    Department of Mechanical Engineering;

    Glenn Norton,
    Center for Sustainable Environmental Technologies,
    Iowa State University;

    Carl J. Bern Ph.D., PE,
    University Professor,
    Agricultural and Biosystems Engineering Department;

    Alicia Carriquiry,
    Professor of Statistics;

    Robert J. Angelici,
    Distinguished Professor Emeritus, Chemistry;

    Mark A. Edelman,
    Professor of Economics and Public Policy;

    Stephen H. Howell,
    Director, Plant Sciences Institute,
    Professor of Genetics, Development and Cell Biology;

    Don Hofstrand,
    Co-Director, Agricultural Marketing Resource Center;

    Stuart Birrell,
    Kinze Manufacturing Professor,
    Associate Professor, Department of Agricultural and Biosystems
    Engineering;

    John G. Verkade,
    Professor of Chemistry and University Professor;

    Kenneth J. Moore,
    Professor of Agronomy;

    David Grewell, Ph.D.,
    Assistant Professor,
    Agricultural and Biosystems Engineering;

    Jill Euken,
    Deputy Director,
    Bioeconomy Institute;

    John A. Miranowski,
    Professor of Economics,
    Director, Institute of Science and Society.
                                   Exhibit 10
    April 20, 2009

    Mary D. Nichols, Chairman,
    California Air Resources Board,
    Headquarters Building,
    1001 ``I'' Street,
    Sacramento, CA.

    RE: Call for Third Party Analysis of Indirect Land Use Change and
    Indirect Effects in Support of the CA LCFS

        Dear Chairwoman Nichols,

        We are writing regarding the California Air Resources Board pending
    rulings next week on the Low Carbon Fuel Standard (LCFS), in particular
    the premature and selective inclusion of indirect effects as a metric
    by which biofuels alone will be judged. We believe immediate action is
    necessary to avoid weakening an otherwise critical carbon-based fuel
    policy.
        The issue of how to deal with indirect effects has slowed down the
    rulemaking already, and is increasingly controversial from a scientific
    perspective. We are concerned that unresolved issues related to
    indirect effects enforcement are needlessly eroding support for an
    otherwise critical fuel policy. We are therefore requesting that CARB
    immediately enact an LCFS based on direct carbon effects while
    establishing an expeditious process to assess and account for indirect
    effects across all fuel pathways, including petroleum.
        In a letter dated March 2, 111 scientists outlined their concerns
    about the selective and premature enforcement of indirect effects in
    the proposed LCFS. We have not received a response to the letter from
    ARB, and have not observed any discernable shift in the approach taken
    by staff. As discussed, while there is general consensus around the
    need for an LCFS, and the decision to enforce direct ``cradle to
    grave'' carbon effects against all fuels, the inclusion of indirect
    land use change and indirect effects for biofuels alone are felt to be
    premature and erroneous based on the following two major factors:

        A. The science around indirect effects is not mature and/or robust
            enough to be included in something as significant as the LCFS.
            In addition, the GTAP model used to determine indirect effects
            has not been validated with any significant amount of field
            data and/or compared with other available models that are not
            commodity-based.

        B. Indirect effects should not be selectively leveraged against any
            fuel type, including biofuels. All fuels have direct and
            indirect effects that should be considered as part of the LCFS.
            The notion that the GTAP model has been used and that fossil
            fuels have no significant indirect effects is unacceptable
            without validation and acceptance within the peer-reviewed
            literature. This result produced by the GTAP model reinforces
            the need for a thorough and robust comparative study of
            different models and different methodologies of all fuel types
            that must be completed before they are added as a component
            under the LCFS.

        Although this letter has sparked significant national interest and
    highlighted the lack of any consensus around indirect effects, thus
    reinforcing the conclusion that further study is absolutely essential
    before inclusion within the LCFS, our concerns have not been addressed
    by CARB and no data has emerged to suggest that CARB's numbers for
    indirect land use change are well grounded. We are therefore requesting
    that CARB Board take the following actions:

        A. Submit an LCFS regulation based on direct carbon effects,
            including direct land use impacts.

        B. Commission the National Academy of Sciences to conduct an 18
            month study on indirect effects of all transportation fuel
            candidates to develop and validate a robust science-based tool
            that can be used within the LCFS. CARB staff should continue to
            lead a corollary effort during this time.

        The LCFS provides an incredible opportunity to reduce the carbon
    intensity of transportation fuel and promote a more sustainable
    transportation fuel marketplace. We commend your leadership and the
    CARB staff for their efforts in developing a workable LCFS regulation.
    However, it is critical that the LCFS stay on course with regard to its
    primary mission of establishing a level, carbon-based playing field for
    all fuels.
        We are writing this letter as researchers in the field of biomass
    to bioenergy conversion, but the signatories do not represent the
    official views of the home institutions, universities, companies, the
    Department of Energy, the United States Department of Agriculture, or
    any of the National Laboratories. We look forward to working with ARB
    to ensure that the regulation reflects the best science available, and
    takes a policy approach that is balanced across all fuel pathways.
                Sincerely,

    Blake A. Simmons, Ph.D.,
    Vice-President, Deconstruction Division,
    Joint BioEnergy Institute,
    Manager, Biomass Science and Conversion Technology,
    Sandia National Laboratories;

    Harvey W. Blanch, Ph.D.,
    Chief Science and Technology Officer,
    Joint BioEnergy Institute,
    Lawrence Berkeley National Laboratory,
    Member, National Academy of Engineering,
    Merck Professor of Chemical Engineering,
    University of California, Berkeley;

    Bruce E. Dale, Ph.D.,
    Distinguished University Professor,
    Dept. of Chemical Engineering & Materials Science,
    Michigan State University.

    cc:

    Hon. Arnold Schwarzenegger, Governor of California,

    David Crane, Special Advisor for Jobs & Economic Growth, Office of
    Governor Schwarzenegger,

    Linda Adams, Secretary, Cal-EPA,

    A.G. Kawamura, Secretary, California Department of Food & Agriculture,

    Mike Scheible, Deputy Director, Air Resources Board,

    Karen Douglas, Commissioner, California Energy Commission.
                                   Exhibit 11
    Comment Log Display
    Below Is The Comment You Selected To Display.
    Comment 51 For Low Carbon Fuel Standard (LCFS09)--45 Day.
    First Name: Chris
    Last Name: Hagerbaumer
    E-mail Address: chrish@oeconline.org
    Affiliation: Oregon Environmental Council

    Subject: comments on LCFS proposed regulation
    Comment:

        The Oregon Environmental Council (OEC) greatly appreciates CARB's
    hard work developing regulations to establish a Low-Carbon Fuel
    Standard. The LCFS is an innovative and important approach to tackling
    global warming, and we are strongly supportive of it.
        Lest you wonder why an out-of-state organization is interested in
    CARB regulations, you should know that the Oregon Department of
    Environmental Quality will hopefully be given the authority by the
    Oregon Legislature this session to undertake rulemaking to establish a
    LCFS in Oregon.
        For many years, OEC has worked to support the development and
    application of a variety of technologies and strategies to reduce
    greenhouse gas emissions from the transportation sector, including the
    production of regional, sustainably produced, low-carbon biofuels.
        OEC is advocating for a LCFS in Oregon that will harmonize with
    California's, and we want to make sure that LCFS implementation is
    accurate and fair.
        The beauty of a LCFS is that it is performance-based, allowing
    affected companies to meet the standard through a variety of means and
    avoiding premature conclusions about the ``right'' technology.
    Encouraging development of the right technologies hinges upon an even
    playing field. We are worried that CARB is creating an uneven playing
    field by choosing to account for the potential indirect carbon effects
    of biofuels, while not accounting for the potential indirect carbon
    effects of other fuels.
        Indeed, other fuels have indirect carbon effects: for example, the
    use of natural gas as a vehicle fuel means less natural gas will be
    available for stationary energy needs, potentially leading to the
    development of more coal-fired power plants. Likewise, the use of
    electricity for our transportation needs may increase demand on
    electricity and push us to dirtier fuels like coal.
        Likewise, oil companies are turning to the most polluting, most
    carbon-intensive means of producing oil--they are disturbing vast
    tracts of land and harming ecosystems while extracting oil from tar
    sands. What is the indirect effect of relying on a resource that has
    peaked? What is the indirect effect of increasing petroleum prices on
    food prices and the resulting increase of food prices on land use
    change?
        In your draft regulation, you indicate that you believe other fuels
    do not have indirect carbon effects. In order for us to be comfortable
    with that statement, we need to see your analysis. The potential
    indirect carbon impacts of fuels besides biofuels need to be modeled by
    CARB, as well.
        We believe it is prudent to follow the example of the EU and the
    recommendations of the 111 scientists who wrote to you on this subject
    who have called for an initial LCFS based on direct emissions while we
    take the time necessary to thoroughly assess indirect effects for all
    fuels.
        An even playing field is crucial to responsible implementation of a
    LCFS.
        Thank you very much for your consideration.

    Attachment:
    Original File Name:
    Date and Time Comment Was Submitted: 2009-04-08 16:19:42
                                   Exhibit 12
    [GRAPHIC] [TIFF OMITTED] 51922.013

    [GRAPHIC] [TIFF OMITTED] 51922.014

                                   Exhibit 13
    CALSTART
    April 15, 2009

    Mary Nichols, Chair,
    California Air Resources Board,
    Headquarters Building,
    1001 I Street,
    Sacramento, CA.

    RE: Comments on Proposed Low Carbon Fuel Standard Regulation

        Dear Chairman Nichols,

        CALSTART strongly supports the adoption of a Low Carbon Fuel
    Standard (LCFS) as a discrete early action measure in California's
    fight against climate change. Though it is somewhat more complicated,
    the general concept of the LCFS is similar to the Alternative Fuels
    Portfolio Standard recommended by CALSTART and the California Secure
    Transportation Energy Partnership (CalSTEP) in its January 2007 Action
    Plan. We applaud the Air Resources Board (ARB) for their work to date
    in developing this important, first-of-its-kind policy to reduce
    greenhouse gas emissions from transportation fuels. Since 2002 and the
    adoption of the Pavley program, the ARB has been working to reduce
    tailpipe emissions. An equal or greater amount of technology forcing
    regulation should now be applied to the fuel sector. The successful and
    timely implementation of California's LCFS is a necessary component of
    the broader fight against climate change. The schedule has already been
    delayed and, given what we now know about rising greenhouse gas
    concentrations in the atmosphere, further delay would not be prudent.
        ARB staff has done a commendable job on the initial analysis and
    regulatory design, particularly with regard to the detailed
    calculations of direct emissions associated with the various fuel
    pathways. We offer the following comments and recommendations to
    strengthen the LCFS and improve its ability to both reduce emissions in
    California and serve as a model for a national program. We are
    providing comments on the following critical issues:

       Implementation and emissions timeline: recent warnings from
            scientific experts make clear the fact that we cannot afford to
            delay emissions reductions. We urge ARB to move forward with
            LCFS implementation without delay and to consider how best to
            encourage near term emissions reductions under the LCFS.

       Indirect emissions: the science in this area is new and
            evolving, and the current regulation only examines one type of
            indirect effects--land use changes, primarily from biofuel
            production. Ideally, we would like to see the inclusion of all
            indirect emissions from all fuels, once the science has evolved
            and there is greater consensus about the secondary impacts of
            all fuels. This was the approach chosen by the European
            Commission.

       Process for proposing new or modified pathways: ARB should
            provide a thoughtful yet efficient and affordable method for
            stakeholders to propose new or modified inputs for both direct
            and indirect emissions. Such a process would improve the
            accuracy of the carbon intensity values while providing an
            incentive for regulated parties to reduce the direct and
            indirect emissions associated with their specific fuel
            pathways. This is particularly important if ARB moves forward
            with a regulation that includes indirect land use change
            emissions as currently outlined in the proposed regulation.

       Models, inputs, and assumptions: the LCFS is heavily
            dependent on complex models with many inputs and assumptions.
            While indirect land use change is the most controversial area,
            there are additional factors that have not been thoroughly
            verified. We recommend that ARB continue working to refine and
            improve upon the underlying pathway analysis at the heart of
            the LCFS through an ongoing public process. The goal should be
            to make sure the latest, best science is employed and to
            validate the models and results as data become available.

        CALSTART believes that a successful LCFS based on sound and
    scientifically defensible analysis can serve as a model for a similar
    policy at the national level. It is therefore very important that we
    ``get this right'' in California.

        Encourage Early Reductions and Avoid Delays

        Recent research suggests that policymakers should strive to
    encourage increased near term emissions reductions. It now appears that
    the Intergovernmental Panel on Climate Change may have underestimated
    the impacts of climate change.\1\ Furthermore, there is increasing
    evidence that suggests that the climate change effects of greenhouse
    gas emissions will be largely irreversible \2\ and potentially abrupt.
    In light of these warnings from the scientific community, there is a
    clear need to accelerate emissions reductions through intelligent
    policy choices and timely implementation of climate regulations and
    programs such as the LCFS.
    ---------------------------------------------------------------------------
        \1\ ``Projections of Climate Change go from Bad to Worse.''
    Science, March 20, 2009. http://rael.berkeley.edu/files/IARU-Coverage-
    Science-March24-2009.pdf.
        \2\ ``New Study Shows Climate Change Largely Irreversible.'' NOAA
    press release, January 26, 2009. http://www.noaanews.noaa.gov/
    stories2009/20090126_climate.html.

        The LCFS and Complementary Policies Should Encourage Early
    ---------------------------------------------------------------------------
    Reductions

        As currently written, the LCFS has a backloaded compliance schedule
    and a relatively modest end goal. We understand the various constraints
    that led to this result, but believe that it highlights the need for
    complementary policies to drive early reductions.
        Furthermore, though CALSTART has not done extensive analysis on the
    subject of accounting for emissions over time, we agree with ARB staff
    on the need to continue evaluating the Fuel Warming Potential (FWP)
    method. This method shows promise because it has a scientific basis and
    takes into account the fact that emissions today are more damaging than
    emissions tomorrow. However, we understand and agree with ARB's
    decision to use the simple Annualized method in the early years, as
    indirect land use emissions debate has not been settled and the FWP
    method has not yet been adequately peer reviewed. After ARB validates
    the models and addresses the ongoing concerns over indirect emissions,
    we would recommend further consideration of the FWP method for time
    accounting.

        The LCFS Should be Implemented without Delay

        We commend ARB staff for the large volume of work they have
    completed to date on fuel pathway analysis and regulatory design. The
    LCFS is a complex and labor-intensive policy and ARB has done an
    admirable job of avoiding major delays. As we continue to move through
    the implementation process, it is important to keep up the momentum, to
    the extent that the analysis is sufficiently rigorous for regulatory
    purposes. As mentioned above, we believe the direct emissions analysis
    is relatively sound and can form the basis of a regulatory program in
    the early years. Whether or not ARB decides to include indirect
    emissions at the outset of the program, we stress the need to move
    forward with some version of the LCFS on schedule. If ARB elects to
    delay the inclusion of indirect effects to allow for additional study
    and validation of model findings, we believe the study should move
    forward quickly and the indirect effects should be incorporated as soon
    as possible.

        Study and Account for Indirect Emissions from All Fuels in a
    Consistent Manner

        The issue of indirect emissions in general and emissions from
    indirect land use change in particular has probably been the most
    controversial aspect of this process to date. The science in this area
    is new and evolving, but it is clear that indirect emissions deserve
    further consideration and should not be ignored. CALSTART commends ARB
    staff for attempting to address this difficult issue in assigning
    carbon intensity values to fuels for the LCFS. In the words of MIT
    Professor John Reilly, one of the peer reviewers for the LCFS, ``this
    is a very new area where research that could establish with confidence
    such indirect emissions is in its infancy. Ideally one would like to
    have had the scientific community investigate these issues and to have
    published competing estimates, resolving among them better or worse
    approaches and identifying uncertainties.'' \3\ Given the timeframe and
    the available data, ARB has had to move forward without this luxury.
    While the work done around indirect effects for the LCFS has clearly
    advanced the science in this area, there is more to be done.
    ---------------------------------------------------------------------------
        \3\ ``Review of Proposed Regulation to Implement the Low Carbon
    Fuel Standard.'' Peer review of John Reilly, Senior Lecturer, Sloan
    School of Management, MIT. http://www.arb.ca.gov/fuels/lcfs/peerreview/
    041409lcfs_reilly.pdf.

    ---------------------------------------------------------------------------
        The Science Regarding Indirect Emissions is Still Uncertain

        The scientific arguments on both sides of this issue are well-known
    and we will not rehash them here. It is important to note, however,
    that there is a general lack of consensus and that the resistance to
    staff's approach on this issue is coming from the scientific community
    as well as from many elements of the biofuels industry.\4\ Even some of
    those who strongly support the inclusion of indirect land use emissions
    from biofuels production admit that there may still be some uncertainty
    over the magnitude of the effect.
    ---------------------------------------------------------------------------
        \4\ For example, 111 Ph.D. researchers recently wrote a letter to
    Governor Schwarzenegger stating their opposition to selective
    enforcement of indirect effects in the LCFS, and noting that ``the
    science is far too limited and uncertain for regulatory enforcement.''
    http://www.arb.ca.gov/lists/lcfs-generalws/28-phd_lcfs_mar09.pdf.
    ---------------------------------------------------------------------------
        ARB Staff's Initial Statement of Reasons (ISOR) indicates that the
    staff is confident about the direction of the effect. However, the ISOR
    underlines the uncertainty surrounding the actual quantitative
    estimates of indirect land use change emissions, stating that ``the
    tools for estimating land use change are few and relatively new'' \5\
    and that ``although one may argue that there is no scientific consensus
    as to the precise magnitude of land use change emissions and that the
    methodologies to estimate these emissions are still being developed,
    scientists generally agree that the impact is real and significant.''
    \6\ CALSTART is not disputing the claim that these effects are real.
    However, we are concerned that the actual methods, models, and
    resulting effect magnitudes may not yet be sufficient for regulatory
    purposes. We are particularly concerned with the ability of the GTAP
    model to accurately predict the effect of domestic biofuel production
    on foreign land management practices and international agribusiness
    investment decisions.
    ---------------------------------------------------------------------------
        \5\ LCFS ISOR, X-5.
        \6\ LCFS ISOR, IV-48.

        ALL Indirect Emissions Should be Included once the Numbers are
    ---------------------------------------------------------------------------
    Better Understood and Independently Evaluated

        The LCFS should create a level playing field that allows fuels to
    compete with each other on the basis of lifecycle emissions. As
    proposed, however, the LCFS includes indirect land use change emissions
    from biofuels but does not include any other indirect effects. The ISOR
    notes that ``staff has identified no other significant effects that
    result in large GHG emissions that would substantially affect the LCFS
    framework for reducing the carbon intensity of transportation fuels.''
    \7\ However, given the small differences in relative carbon intensities
    between the various fuels and the uncertainty as to the magnitude of
    indirect land use change emissions, CALSTART is concerned that the
    inclusion of indirect effects on a selective basis could undermine the
    integrity of the LCFS. If ARB staff has reason to believe that indirect
    emissions from other fuels such as conventional gasoline and diesel are
    negligible or nonexistent, we would encourage staff to make this
    analysis publicly available.
    ---------------------------------------------------------------------------
        \7\ LCFS ISOR, ES-29.
    ---------------------------------------------------------------------------
        CALSTART believes that the LCFS should ultimately include all
    emissions (direct and indirect) from all fuels, particularly if sound
    analytics can be adopted for accurately estimating the secondary
    impacts. We are concerned that selective enforcement of indirect
    effects may create the appearance of a bias that could potentially hurt
    the chances of broader adoption of the California model. We believe
    that the lack of readily available models and estimates for indirect
    emissions from other fuels is an argument for additional study, within
    a strictly time limited period, rather than an argument for assuming a
    value of zero. We commend ARB staff for stating that they ``will
    continue to work with interested parties to identify and measure [other
    indirect] effects,'' \8\ and believe that a thorough and rigorous
    independent analysis is the best way to address these issues. Whether
    or not indirect effects are included at the outset of the regulation,
    we recommend moving forward with a comprehensive and independent
    analysis of indirect effects as soon as possible.
    ---------------------------------------------------------------------------
        \8\ LCFS ISOR, ES-29.
    ---------------------------------------------------------------------------
        CALSTART has not done extensive analysis of the direct and indirect
    emissions from conventional fuels and we do not have hard data to
    present. However, if ARB is going to look beyond direct emissions and
    make assumptions about how economic activity in the USA will drive
    economic behavior in other countries, there are a number of greenhouse
    gas impacts associated with the carbon intensive incumbent fuels that
    deserve attention. Below are some examples:

       Oil exploration: it is our understanding that direct
            emissions from oil exploration are not included in the carbon
            intensity calculations for petroleum-based fuels.

       Military protection of oil supplies: many economists have
            attempted to quantify the costs of protecting oil supplies in
            the Persian Gulf. One estimate from researchers at UC Davis'
            Institute for Transportation Studies put the annual economic
            costs of military operations tied to defense of oil supplies at
            $26.7-$73.3 billion, with $5.8-$25.4 billion of this tied
            directly to the cost of defending the use of motor oil by U.S.
            vehicles.\9\ The emissions from these large scale military
            operations would be difficult to quantify, but that does not
            mean they should be ignored.\10\ Even more controversial and
            difficult, but no less real, are the carbon emissions
            associated with global conflict over energy. Clearly there was
            a carbon impact when the Iraqi Army blew up the wells in Kuwait
            during the first Gulf War and fires raged for weeks thereafter.
            When such conflicts occur, will the emissions be factored into
            the respective inventories and models?
    ---------------------------------------------------------------------------
        \9\ ``U.S. Military Expenditures to Protect the Use of Persian-Gulf
    Oil for Motor Vehicles.'' Mark Delucchi and James Murphy, April 1996,
    revised March 2008. http://www.its.ucdavis.edu/publications/2004/UCD-
    ITS-RR-96-03(15)_rev3.pdf.
        \10\ Former U.C. Berkeley Professor Alex Farrell, who was deeply
    involved in the lifecycle calculations underlying the LCFS, agreed in a
    private conversation with John Boesel in February 2008 that ``such
    emissions probably should be included'' in the LCFS.

       Indirect, ``spill-over'' emissions from petroleum: changes
            in the price of oil are likely to have far-reaching impacts on
            a variety of markets and actors worldwide. Emissions resulting
            from this would be difficult to quantify because of the degree
            to which oil touches all aspects of our economy, but this does
    ---------------------------------------------------------------------------
            not mean these effects are not real.

        These are just a few examples of the types of effects that we think
    should be examined. There certainly may be others.

        Additional Work is Needed to Get this Right

        CALSTART recommends that ARB commission a rigorous and
    comprehensive study of indirect emissions from all petroleum-based and
    alternative fuels through an independent and well respected body such
    as the National Academy of Sciences. To avoid the pitfall of paralysis
    by analysis, we recommend that such a committee be given a defined
    period of 12-24 months to report back. The Energy Independence and
    Security Act of 2007 highlighted the need for additional work in this
    field as it relates to biofuels, and indirect emissions from other
    fuels are even more uncertain.\11\ If the study could be completed
    quickly, ARB could implement the LCFS in two phases, beginning with
    direct effects only and including the indirect effects after the
    completion of the study. While we think this phased approach has
    merits, we understand that this delay could be problematic and that ARB
    is likely to move forward with a regulation that includes indirect land
    use change. Even if this is the case, we believe it is important to
    proceed immediately with an independent review of indirect effects for
    all fuels, with the goal of updating and refining the carbon intensity
    values as the science evolves. Regardless of the approach taken, we
    don't recommend the ARB delay any further in implementing the program.
    It is time to move forward.
    ---------------------------------------------------------------------------
        \11\ EISA 2007 directs the Secretaries of Agriculture and Energy to
    carry out a Biomass Research and Development Initiative focused on,
    among other things, ``the improvement and development of analytical
    tools to facilitate the analysis of lifecycle energy and greenhouse gas
    emissions, including emissions related to direct and indirect land use
    changes, attributable to all potential biofuel feedstocks and
    production processes.'' EISA, Title II, Subtitle B, Sec. 232(b)(3).
    http://frwebgate.access.gpo.gov/cgi-bin/
    getdoc.cgi?dbname=110_cong_bills&docid=f:h6enr.txt.pdf.
    ---------------------------------------------------------------------------
        We are aware of the fact that some may view our position and
    recommendations on indirect emissions as a delay tactic designed to
    support the ethanol industry in the early years of the LCFS. CALSTART
    is a fuel- and technology-neutral organization with no particular
    interest in supporting the ethanol industry at the expense of the
    environment or other alternative fuels. Rather, we believe this study
    would improve the analysis underlying the LCFS, address legitimate
    stakeholder concerns, and increase the chances of a broader adoption of
    the California model.

        Create a Thorough and Efficient Process for Proposing New or
    Modified Pathways

        CALSTART commends ARB staff for including in the regulation
    processes for modifying model inputs to reflect specific processes
    (Method 2A) and for creating new fuel pathways (Method 2B). CALSTART
    believes it is imperative that these processes apply to indirect
    emissions as well as direct emissions. The language in the ISOR refers
    only to new or modified inputs for direct emissions, but ARB staff
    mentioned in the March 27th LCFS workshop that they saw the need to
    ``provide a path forward'' on the indirect emissions side as well.
    Staff indicated that they would create a process for stakeholders to
    get credit (in the form of a reduced carbon intensity value) for
    demonstrated reductions in indirect emissions, perhaps through an
    expanded Method 2B.
        Such a process is vitally important to the success of the LCFS,
    especially in light of the fact that ARB is likely to move forward with
    a regulation that includes controversial estimates of emissions from
    indirect land use change. This process would both improve the accuracy
    of the carbon intensity values and provide an incentive for regulated
    parties to reduce the direct and indirect emissions associated with
    their specific fuel pathways. From a practical standpoint, the process
    will be much more effective if it is quick, efficient, and transparent.
    If ARB is able to incorporate such a process in to the regulation, this
    should help to address some of the concerns of biofuel producers and
    should also improve the overall public perception of the regulation.

        Continually Work to Improve and Validate Models, Inputs, and
    Assumptions through a Transparent Public Process

        The LCFS is dependent on complex models with many inputs and
    assumptions. Given the nature of the regulation and the available data
    and models, the LCFS represents a departure from past ARB regulations.
    Other ARB models and programs had some scientific uncertainty, but this
    program stands out due to the modeling constraints and assumptions, the
    scarcity of data for some of the key inputs, and the relative lack of
    real world validation of model results.
        The most obvious area of potential disagreement is indirect land
    use change. The LCFS relies on relatively new science and models that
    are intended to predict the outcomes of international economics and
    human behavior. Given the lack of consensus and the changes in ARB's
    indirect emissions estimates over the past several months, we expect to
    see ongoing work in this area. For example, Professor Valerie Thomas
    noted in her official peer review of the LCFS, ``that observed data
    have not been used to validate the GTAP model findings is a significant
    weakness. The changes in corn production resulting from the Federal
    renewable fuel standard, and the change in Brazilian sugar production
    resulting from increased ethanol production should be measurable, and
    should be measured to validate the model assumptions. The ARB model
    should be adjusted to reflect data.'' \12\
    ---------------------------------------------------------------------------
        \12\ ``Review of Proposed Regulation to Implement the Low Carbon
    Fuel Standard.'' Peer review of Valerie Thomas, Associate Professor,
    School of Industrial and Systems Engineering, Georgia Institute of
    Technology. http://www.arb.ca.gov/fuels/lcfs/peerreview/
    041409lcfs_thomas.pdf.
    ---------------------------------------------------------------------------
        While ARB's estimates of emissions associated with indirect land
    use change have generated the most debate, CALSTART notes that there
    are other areas of uncertainty that deserve additional attention. One
    factor that can easily tip the balance between various fuels is the
    Energy Economy Ratio (EER). Like indirect land use, this area has
    generated disagreement and a wide range of estimates. ARB staff admits
    that ``the data are relatively limited'' for establishing EER values
    for advanced and emerging vehicle technologies.\13\ Professor Linsey
    Marr outlines many important issues related to EER calculations and
    assumptions in her peer review of the LCFS.\14\ The co-product credit
    is another factor that deserves additional scrutiny.
    ---------------------------------------------------------------------------
        \13\ LCFS ISOR, ES-18.
        \14\ ``Scientific Review of the California Air Resources Board's
    Proposal to Implement the Low Carbon Fuel Standard.'' Linsey Marr,
    Professor of Civil and Environmental Engineering, Virginia Tech http://
    www.arb.ca.gov/fuels/lcfs/peerreview/041409lcfs_marr.pdf.
    ---------------------------------------------------------------------------
        Given the degree to which the success of the LCFS relies on
    accurate models and inputs, we urge ARB to put into place a thorough
    and rigorous process for refining and improving the underlying
    analysis. This process should be transparent and open to public
    participation. Ongoing dialogue and stakeholder input should help to
    improve the underlying analysis as well as the public perception of the
    LCFS program.
        CALSTART thanks the ARB for the opportunity to provide input
    throughout this rulemaking process.
                Sincerely,
                [GRAPHIC] [TIFF OMITTED] 51922.015

    John Boesel, President and CEO
                                   Exhibit 14
    University of California, Davis
    College of Agricultural and Environmental Sciences,
    Agriculutral Experiment Station
    Cooperative Extension
    April 22, 2009

    Mary D. Nichols,
    Chairperson, California Air Resources Board,
    Headquarters Building,
    1001 I Street,
    Sacramento, CA.

        Dear Chairperson Nichols:

        The California Air Resources Board (CARB) is poised to adopt a Low
    Carbon fuel Standard (LCFS) at its up-coming meeting on April 23, 2009.
    Through the LCFS, CARB seeks to lower the carbon intensity of
    transportation fuels by 10% by 2020 by blending alternative fuels
    derived from biomass with petroleum-based fuels. I fully support this
    objective. As you realize, this seemingly modest objective masks a
    difficult, complex task, never before attempted by any state or
    national government. While difficulty is not an excuse for inaction,
    complexity requires prudence in choosing what to do in difficult
    situations. If the CARB adopts the LCFS, including the currently
    proposed method of calculating GHG values derived from indirect Land
    Use Changes (iLUC), it will make a serious regulatory mistake. The
    current iLUC policy is a regulatory bias that cannot be justified. It
    will inhibit the development of valuable alternative fuel sources,
    handicap the development of green energy businesses in California, and
    increase the costs of alternative fuels. In my view, it is based on
    some important misunderstandings about the nature of modern farming
    systems and about how biofuel businesses could best develop and evolve
    over time. It significantly overestimates the reliability and
    usefulness of the modeling method chosen to predict green house gas
    (GHG) costs associated with agricultural biofuels, particularly those
    associated with land use change in remote locations.

        If CARB adopts the LCFS as proposed, as a remedy it should also at
    a minimum agree to support a rigorous search for alternative methods of
    estimating ILUC, provide for frequent external review and assessment of
    these methods, and create a process for estimation of ILUC GHG costs
    based on a comparison of approaches. Land change science, the direct
    evaluation of land change processes and effects where they actually
    occur, offers an alternative to the method of indirect inference now
    used as the sole means to assess indirect sources. The use of
    comparative methods is a more justifiable basis for assigning something
    as complex and hard to define as an indirect GHG value. While it will
    be difficult, difficulty is not an excuse for inaction. The European
    community, faced with same uncertainty, has prudently opted for the
    development of additional assessment methods. This would be wise for
    California as well. The LCFS will have implications beyond affecting
    the carbon intensity of transportation fuels. Since the consequences
    will be large and many will be unpredictable, and since there is
    serious scientific agreement about the best means to go about
    regulation, the CARB should do whatever is possible to achieve the most
    rational standard possible.
        There are several issues that I wish to address and have staff
    consider. These are based on comments that I made at the CARB board
    meeting on March 26, 2009, at the invitation of the CARB staff.

        1. Crop based biofuels do not always compete directly with food
            uses. It is not a question of food (or feed) vs fuels, but a
            question of how to create more sustainable agro-ecosystems
            (more diverse, more profitable). In many cases, crops grown for
            biomass may facilitate that process, not only in California
            also in many locations in the developing world were human need
            is great.

        2. The distinction between first generation biofuels and second
            generation biofuels referred to in the regulation and
            justifying documents is partially arbitrary and misleading. If
            the entire crop plant were used (corn, sugarbeets), then energy
            yields could be similar to or even greater compared to so-
            called 2nd generation crops like switchgrass. An integrated
            bio-refinery may change the production of energy to a by-
            product or waste management process rather than the primary
            activity from the use of purpose grown crops. In many cases,
            the use of some high quality crop resources may facilitate the
            use of a larger amount of low quality ones. These developments
            will need time to evolve from current crop-based models. This
            evolution should be encouraged by regulation, not stifled
            prematurely.

        3. California should encourage indigenous biofuel production to do
            its share to reduce GHG without exporting all the consequences
            of doing so to other locations. This is partly a matter of
            ethics, but the state will also have the best estimates of GHG
            effects for local systems.

        4. The key to a successful transition to a low carbon future will
            be entrepreneurial innovation. The state should err on the side
            of encouraging such innovation. The effects of regulation on
            the energy sector are so fundamental, far-reaching and complex,
            that prudence and time are needed to achieve the greatest net
            environmental and social benefits possible.

        5. The decision to impose an iLUC handicap on agricultural biofuels
            was premature and occurred without sufficient understanding of
            the nature of agricultural systems. This decision violates the
            principle of a performance standard by excluding potentially
            viable biofuel sources and methods. iLUC should be estimated
            using several methods, with a preference for direct estimation.
            Reliance on a single method is unwise because no model is
            currently able to deal with this complex issue adequately.
            Additional time is needed to create comparative iLUC
            approaches. In the interim, CARB should rely only on the best
            direct GHG estimates.

        6. California, the United States, and European Union should agree
            on the use of several policy approaches to avoid undesirable
            LUC changes, including direct intervention to protect high
            value ecological areas in developing parts of the world, while
            allowing for the fulfillment of needed human development. This
            important goal cannot be achieved in a single regulation like
            the LCFS and may be inhibited by it. The difficulty of this
            effort should not inhibit attempting it.

        Before concluding, I wish to comment in greater detail on the use
    of models to infer a market-induced effect on land use change in Latin
    America and elsewhere--the idea that if we cut down rainforests to
    replace crops used for biofuels, more harm to the atmosphere is done
    than good. This concern is the basis for the bias against agricultural
    biofuels built into the proposed LCFS. There is considerable
    disagreement among scientists about how best to quantify and account
    for the indirect affects of land use practices. Staff at the CARB, and
    some scientists testifying to the CARB, have asserted that the best
    science available has been adopted by CARB to set its standard.
    Actually, it would be more accurate to say that the most convenient
    science available has been adopted. CARB has decided to use a
    computable global equilibrium model called GTAP for this purpose. GTAP
    is widely and justly admired, and is a significant intellectual
    achievement. It predicts the effects of changes in the supply of
    agricultural commodities on market prices and sales around the world,
    among other outputs. It accounts for global market adjustments in
    multiple economic sectors. For the purposes for which it was created,
    it is very useful. CARB, however, is using it to infer changes in land
    use in remote regions, especially primary forest clearing in the
    tropics. Doing so allows the agency to create a green house gas cost
    associated with this clearing and assign that cost to a biofuel
    produced in Iowa, for example. Ironically, the cost of indirect land
    use change for crop based biofuels is itself estimated indirectly.
    Importantly, land use change is not discovered by using the model.
    Rather, land use change is assumed to occur in the model, so choosing
    this model necessarily results in a land use change prediction. This is
    a troubling way to implement an important policy like the LCFS because
    it gives the appearance of and in fact creates an automatic bias
    against one class of biofuels, contrary to the principle of a truly
    performance-based standard.
        Alternatively, newly developing land change science points instead
    to many other factors that have been in place for decades or longer,
    and which are far more influential locally. GTAP was not created to
    estimate ILUC in remote locations where markets and property rights do
    not function and where the loss of existing vegetation will not have
    significant consequences. So what might be justly deemed the best
    science for one purpose, is inadequate, inappropriate and far from best
    when used inappropriately for another. An indirect estimate of indirect
    land use change may result from the operation of an elegant model, but
    it fails the test of predicting actual behavior in real landscapes.
        This disagreement may seem merely like an argument among modelers.
    Why is it important enough to cause a delay the adoption or
    modification of a part of the LCFS? The reason is that the consequences
    of these new policies affecting the regulation of carbon are large. The
    LCFS, and other carbon regulations like AB 32 now in force in
    California are not simply carbon regulations. They will affect all
    aspects of our lives and make many things that we have come to value
    more costly and more difficult. They will have profound long-term
    economic and social consequences which cannot be accurately predicted.
    With such radical changes in store, we should not be in a rush. A
    prudent approach to policy would be incremental, characterized by an
    appropriate sense of humility. In times of great change and uncertainty
    like the present, it is more reasonable to be suspicious about the
    reliance on a single model for creating policy. Where serious
    scientific disagreement exists, as it does here, more time should be
    taken. Before institutionalizing bias against agricultural biofuels,
    additional ways of estimating indirect land use changes associated with
    agricultural biofuels and associated carbon accounting should be
    developed and compared. It is possible that the estimates of the carbon
    costs of biofuels using differing methods may prove to be even greater
    than the one proposed by CARB currently. But the state will have a
    level of certainty and justification more appropriate to the level of
    consequences stemming form the regulation.
        Prudence suggests that when creativity and innovation will be
    needed to overcome unprecedented challenges like eliminating the use of
    oil, the regulatory process should err on the side of encouraging
    innovation. This is exactly the opposite of what will occur if the LCFS
    is adopted as currently proposed. In the end, policy makers have to
    decide, as the CARB staff and those that support its decisions have had
    to decide. But at a fundamental level these decisions are not based on
    science, but on the preferences of scientists and regulators for
    certain ways of regulating. The sciences involved cannot be used to
    analyze or justify their own presuppositions or the proper limits for
    their use in policy making. An algorithm cannot tell us which values
    are most important.
        I have spent my lifetime working on food production on several
    different scales, using several different approaches, from organic
    gardening to family-scale dairying to commercial crop production in
    California, with some international agricultural experience to add
    leaven. The concerns raised here are not mine alone, however, but are
    shared by many agricultural scientists, engineers, international
    development specialists and biologists interested in the best ways
    forward to a future with reduced dependence on petroleum. These have
    been expressed in letters and comments to CARB, so far without
    noticeable effect. I do not work for a petroleum company or the
    biofuels industry. But I do care about a prosperous future for the
    people of California and a sustainable environment. My own biases are
    towards developing more crop alternatives for farmers in California
    with the hope of improving the agro-ecological performance of farms and
    their profitability. The right agricultural biofuels may do both in the
    appropriate locations, supported by prudent policies. Trying to
    determine how to achieve these goals and the effort needed to do so
    should not be forestalled by hasty policy making. The European
    community, faced with same uncertainty, has opted for the additional
    development of assessment methods. This would be wise for California as
    well.
        While I am critical of some aspects of the proposed LCFS
    regulation, I appreciate the extraordinary efforts and good faith of
    CARB staff as they worked to create a uniquely challenging regulation.
    I have enjoyed working with them both professionally and personally.
                Sincerely,

    Stephen R. Kaffka,
    Department of Plant Sciences,
    University of California, Davis, and
    Director of the California Biomass Collaborative.
    srkaffka@ucdavis.edu
    530-752-8108
                                   Exhibit 15
    University of California
    Agriculture & Natural Resources
    Cooperative Extension  Sutter/Yuba Counties
    April 21, 2009

    Mary D. Nichols, Chairwoman,
    c/o Clerk of the Board
    Air Resources Board,
    1001 I Street,
    Sacramento, CA.

        Dear Ms. Nichols,

        I have been asked to review the animal nutrition discussion in the
    appended report to the Proposed Regulation to Implement the Low Carbon
    Fuel Standard (Vol. II) by the California EPA Air Resource Board. I
    have a Masters degree in Animal Nutrition from UC Davis Animal Science
    Department. I also have been employed by the University of California
    Cooperative Extension since 1982 working with the California livestock
    industry conducting applied research and educational programs. This
    experience gives me extensive practical knowledge of livestock diet
    formulation and management.
        In the strict nature of the University, my comments are unbiased
    toward the outcome of the findings. My only desire is to make sure that
    the best science is used in the estimation or modeling that directs
    public policy decisions.
        The document was difficult to review, due to poor referencing and a
    lack logical page numbering to the over 300 pages of information. The
    reader is given a reference to Appendix C with no direct page number to
    find the start of that section. Much time is loss searching the
    document to find the appropriate information to make a coherent
    comment. Of the references given for Appendix C that were animal
    nutrition related, fifty-eight percent had an incomplete citation to
    allow the reviewer to find and review the document. Both of these
    document deficits could indicate that staff had a limited amount of
    time to properly develop the document.
        Animal nutrition expertise is greatly lacking in the discussion on
    pages C-51 to C-54. The performance of an animal can greatly differ
    based on the optimization of the ration of feeds provided and the
    animal's nutritional requirements. There is a great amount of
    University information on DDGS available. Most nutritionists use the
    National Research Council publications on Nutrient Requirements of Beef
    Cattle, Dairy, and Swine as the guide for nutritional composition of
    feeds. Single stomached animals (swine and rats) have very different
    digestive capabilities from ruminate animals (cattle and sheep). In
    most cattle operations, DDGS serves as a protein source and competes
    with soybean meal, canola meal, and cottonseed for diet utilization.
    The amount of use in diets will be determined by price. Like all by-
    product feeds, there is a limit to the amount that can be included in
    the diet.
        On page C-52 it is stated that the nutrient concentrations in DDGS
    vary considerably. This is normal for by-product feeds and all
    livestock nutritionist and managers can address that in ration
    formulation. In almond hulls, the nutritional composition will depend
    on the fan adjustment that sorts hulls from shell and twigs that have
    much lower digestibility. Nutritional testing and ration construction
    using variable products is a normal operation in the industry. This
    also is applicable to the browning reaction concern stated. The feed is
    tested in a laboratory and the price and amount in the ration are
    adjusted to economically meet the performance needs of the animal. The
    document presents feeding as a static process, when it is very dynamic
    with varying animal nutritional needs and ability to adjust the diet to
    optimize the animal performance based on research and applied feed
    knowledge.
        On page C-53 it is stated that ``less protein in DDGS is available
    to the animal''. Ruminate protein utilization is divided into two
    areas; rumen and bypass. The combination of both these provides the
    total protein utilization. The quote addresses the rumen protein
    utilization, but does not recognize the importance of bypass protein.
    This is an important aspect that needs to be acknowledged.
        The concerns about lysine, sulfur and phosphorus in DDGS diets
    raised in the document again indicate the lack of animal nutrition
    knowledge represented in this section of the document. Ration
    formulation is again a process of analyzing of the feed's composition
    and optimizing the ration of different feed sources and supplements to
    meet animal requirements for different performance (growth, lactation
    and pregnancy). All of these concerns can be addressed in the ration
    formulation.
        Transportation and handling of DDGS has occurred in California. I
    have observed large and small operations using the product and all have
    adapted systems to utilize the product without problems. Feed
    utilization is based on price for energy and protein content. If
    livestock producers find a lower priced product, they quickly invest in
    proper storage and feeding infrastructure. With 1.6 million dairy cows
    in California, at the right price and location of plants in the dairy
    production areas, transportation and utilization of WDGS would not be a
    problem.
        On page C-54 the document demonstrates a lack of knowledge of the
    livestock feeding industry and the educational institutions that work
    with them. Producers are keenly aware of how to feed the product and
    both the California State Universities (Fresno, Chico and Cal Poly) and
    University of California have active applied research and education
    programs for growers on any issues if it should arise in using DDGS.
        It is not made clear what ``traditional feeds'' are in the document
    in the first paragraph on page C-52 or how the LCFS model of DDGS
    utilization is developed. I have reviewed publication by Wang et al.
    (2008), and find it provides sound animal nutrition data to the
    analysis. It is a superior review and analysis of the DDDS utilization
    to the discussion in this document. This is an area that the staff
    clearly needs to educate themselves on to be able to competently make
    any conclusions that direct important policies of the State of
    California.
        I disagree with the staff recommendations on DDGS. Livestock
    producers will use all the DDGS if it is produced and priced correctly.
    In California, it could displace canola meal in most rations, which is
    being shipped in from Canada for approximately $70/ton for
    transportation. This would greatly reduce the carbon footprint if the
    DDGS was produced in California.
        I suggest that it would be prudent for the deliberation of this
    policy be extended. I invite the staff to engage the UC Davis Animal
    Science Department in the discussion of the correct method to use to
    evaluate DDGS ration utilization.
                Sincerely,

    Glenn Nader,
    UC Livestock and Natural Resources Advisor.
                                   Exhibit 16
    Comment Log Display
    Below Is The Comment You Selected To Display.
    Comment 209 For Low Carbon Fuel Standard (LCFS09)--45 Day.
    First Name: Virginia
    Last Name: Dale
    E-mail Address: vdale212@comcast.net
    Affiliation:

    Subject: Great uncertainty surrounds Indirect Land-Use Change (ILUC)
    estimates; therefore ILUC fact
    Comment:

    April 22, 2009

    California Air Resources Board
    Headquarters Building
    Sacramento, CA 95812

    REF: Great uncertainty surrounds Indirect Land-Use Change (ILUC)
    estimates; therefore ILUC factors should be excluded until better data
    and documentation are available and scientifically peer-reviewed

        Dear Board Members:

        I am writing to recommend that CARB reconsider the proposal to
    include indirect carbon emissions from land-use change (or Indirect
    Land-Use Change--ILUC--factors) in the Low Carbon Fuel Standard (LCFS)
    rule. A delay in adopting the ILUC component of the proposal for GHG
    emission calculation is warranted because current ILUC emission factors
    are theoretical estimates rather than science-based calculations.
        The ILUC implications of the LCFS are largely based on a global
    equilibrium model that is not capable of assessing impacts on indirect
    land use. Instead, natural resource extraction activities may very well
    be among the most significant factors contributing to the accelerated
    loss of natural habitat in the remaining forest zones of our planet.
    Based on my field work in the Brazilian Amazon, Panama, Guatemala and
    personal research in south and southeast Asia as well of review of
    numerous scientific studies, it seems that land-use change in
    developing countries is a combination of cultural, environmental,
    social, economic, political, and technological factors. Global market
    conditions often have a quite limited influence. In contrast to the
    model predictions, numerous studies suggest that improved prices and
    expanded market options for products, as expected under biofuel
    policies, reduce pressures for deforestation and provide tools and
    incentives to promote more sustainable land use.
        The ILUC estimates carry significant uncertainty because they are
    based on: (a) a model that was never validated or calibrated for the
    purpose of estimating land-use change; (b) input data for land use with
    degrees of uncertainty much larger in magnitude than the changes
    modeled, casting considerable doubt on the validity of results; (c) one
    set of modeling results when the same model produced wide-ranging
    results for indirect land-use change in response to minor adjustments
    in assumptions and inputs (and there is ongoing debate surrounding the
    accuracy and validity of many of those assumptions, factors and inputs)
    as documented in the papers published on the GTAP website and for CARB
    in the past 24 months; and (d) a hypothesis for indirect land-use
    change that does not meet the ``rules of reason'' tests established in
    U.S. courts for indirect environmental impacts, exposing the LCFS rule
    to potentially serious implementation obstacles that could be avoided
    if the ILUC component were postponed until better data and analytical
    tools are developed.
        Examination of the land use and economic models show that there is
    not currently any accepted approach for calculating indirect land-use
    change impacts from U.S. biofuel production and policy. GTAP has not
    been calibrated or validated for making land-use change estimates. The
    GTAP modeling assumptions used to estimate ILUC do not come close to
    reflecting the conditions and forces that prevail in the areas where
    impacts are estimated to occur. Baseline land-cover and land-use data
    and other underlying assumptions for the modeling carry huge
    uncertainties, yet these uncertain inputs determine the results. The
    sensitivity of results is illustrated in part by the wide range of ILUC
    results reported among the GTAP reports issued on this topic in 2008
    and 2009.
        Several U.S. Court decisions have considered if and when indirect
    environmental impacts need to be incorporated under proposed government
    projects. The decisions can be assembled under ``rules of reason'' that
    help determine when indirect impacts should be incorporated. The basic
    question is, ``Are the impacts (indirect land use change effects, in
    this case) reasonably certain to occur as a result of proposed action,
    or is the estimate (of ILUC) based on speculation?'' There is a lack of
    consensus on this issue in the scientific community. But, several
    considerations from past court cases may help answer the ``rule of
    reason'' question:

        (a) Are estimated ILUC impacts speculative within the context of
            all the other events, circumstances and contingencies that
            exist to enable the effect (e.g., deforestation)?

        (b) Is the impact (loss of natural habitat/deforestation)
            inevitable, independent of the proposed action and the
            theorized indirect impacts?

        (c) Does the ``precautionary principle'' clearly favor one proposed
            action over another? (e.g., What are the impacts on land-use
            change and deforestation if less biofuels are accepted under
            LCFS due to the assumed ILUC factors?)

        (d) Is the estimated impact increasingly tenuous as inquiry extends
            outward from the core project area?

        (e) If there is a ``reasonably foreseeable'' indirect impact, does
            it occur in a remote locale that is not under direct U.S.
            control?

        (f) What is the ``legally relevant cause'' of the impact? (Is the
            ILUC impact isolated from the proposed action?)

        Thus it cannot be concluded that the estimated indirect impacts are
    caused by the proposed action. In the case of the California LCFS,
    rather than include ILUC factors at this time as proposed, we recommend
    that a more prudent approach would be to identify these as possible
    indirect impacts and recommend mitigations to limit the likelihood of
    negative effects. Such mitigations could include adherence to
    sustainable production standards that are developed and monitored by
    third parties.
        I applaud your pioneering efforts to establish a LCFS and support
    your initiatives to reduce emissions and improve welfare for present
    and future citizens. However the market-mediated land-use impacts
    hypothesized by GTAP and similar economic models are not merely
    inaccurate; they may indeed be estimating impacts that are opposite to
    what could be expected in the real world, particularly when biofuel
    production is backed by incentives for sustainable production,
    environmental legislation and enforcement. Much more work is needed to
    better understand the interactions among these factors, going beyond
    theories, to calibrate and validate models that reflect how behavior is
    impacted, and to better quantify the degree and direction of impacts
    from biofuels.
                Sincerely,

    Virginia H. Dale, Ph.D.,
    212 Whippoorwill Drive,
    Oak Ridge TN, 37830.

    Attachment:
    Original File Name:
    Date and Time Comment Was Submitted: 2009-04-22 11:37:55
                                   Exhibit 17
    Comment Log Display
    Below Is The Comment You Selected To Display.
    Comment 128 For Low Carbon Fuel Standard (LCFS09)--45 Day.
    First Name: Gal
    Last Name: Luft
    E-mail Address: luft@iags.org
    Affiliation:

    Subject: comments on LCFS/land use
    Comment:

        One can argue the land use surcharge back and forth on a
    philosophic level and on the accuracy of the model. However, there are
    several fundamental problems with the way land use surcharge is
    applied. Generally speaking land use intensity is highly cyclical. It
    corresponds mainly a combination of demand and price for agriculture
    products. The report clearly stated the case for land use intensity
    increase with increased demand for bio-fuels. However, as seen
    recently, the price of agriculture commodities are only partially
    dependent on bio-fuel demand. In Q4 of 2008 we saw record production of
    ethanol but nonetheless corn and ethanol prices fell by 70%. This means
    that corn prices are more sensitive to oil prices than to demand from
    the biofuels industry. Put those two together, and the result is that
    as oil prices go up, commodity prices go up, corn prices go up and land
    use intensity goes up with it. Then we go through a period of
    oversupply with corresponding price reduction and land use intensity
    reduction. So to the extent that bio fuels offset the demand for oil
    and put a downward pressure on gasoline price, it moderates the
    increase in land use intensity.
        The second error I see in the analysis is in the accounting of GHG
    emissions from the conversion of cattle pasture to agriculture (corn)
    land. Most cattle pasture in the U.S. is grass land. The cattle eats
    the grass and converts it to methane which is 23 times more potent then
    CO2. As corn becomes more expensive, feed become more
    expensive so meat production becomes less economical. It is logical
    that meat growers will then lease their land to corn growers. As I see
    the reality of corn expansion, brand new barren land is the last
    resort. The growers will first grow more corn on the land they already
    cultivate, then they will use land that was cultivated in the past but
    is now idle (because it was not profitable to cultivate). Then they
    would use cattle pasture that is more productive than barren land. As I
    said, the calculation of land use change from cattle pasture to corn is
    incorrect because it does not take into account the root system (corn
    has a much more robust root system which capture more CO2
    than grass root system. Corn harvesting does not involve removing the
    roots from the ground.) and it only focuses on CO2 which
    misses the potent GH effect of methane gas. Add to this the GHG
    emission of meat processing, packaging, freezing and transportation and
    you will get huge savings in GHG emissions when converting cattle
    pasture to biofuels crop.
        The third error is ignoring the fact that the same market forces
    that increase the demand for corn ethanol and with it increase in land
    use intensity, will eventually find a cheaper alternative that will
    reduce the demand for corn ethanol and with it reduce the land use
    intensity: As land become more valuable and corn more expensive, corn
    ethanol will become more expensive too. This will further increase the
    effort to invest and produce ethanol from other sources such as
    cellulosic ethanol and ethanol from algae/seaweed. These new and
    cheaper sources will undermine the demand for corn ethanol which will
    reduce the demand for land eventually causing the land to revert back
    to its original use. This demand destruction is surly within the scope
    of the timeframe that the land use change surcharge applies to.

    Attachment:
    Original File Name:
    Date and Time Comment Was Submitted: 2009-04-19 11:24:50
                                   Exhibit 18
    [GRAPHIC] [TIFF OMITTED] 51922.016

    [GRAPHIC] [TIFF OMITTED] 51922.017

    [GRAPHIC] [TIFF OMITTED] 51922.018

                                   Exhibit 19
    April 3, 2009

    Mary D. Nichols, Chairwoman,
    c/o Clerk of the Board
    Air Resources Board,
    1001 I Street,
    Sacramento, CA.

        Dear Ms. Nichols,

        I am writing to comment on California's proposed low carbon fuel
    standard (LCFS).
        While the LCFS clearly has noble intentions, it is flawed because
    it includes indirect land use charges to biofuels. These charges are
    unprecedented--for example, does CARB do any of the following?

       Charge electric or hybrid automobiles for the GHG emissions
            from the fossil energy power plants used to provide their
            electricity (or for the indirect heavy-metal emissions from
            mining operations needed to produce their batteries).

       Charge $100k electric automobiles with the indirect GHG
            emissions caused by their manufacture (probably 7x those of a
            small gasoline powered vehicle).

       Charge bicycles (I'm a longtime bike commuter) for the
            indirect GHG emissions due to the longer life expectancies and
            bigger appetites of riders.

       Charge gasoline for the indirect GHG from the military
            actions aimed at securing Mideast oil.

        How rational is the proposed policy if biofuels must account for
    their indirect GHG impacts while other fuels/modalities don't have to?
        Indirect land use effects are real, but difficult to quantify. But
    indirect impacts of transportation fuel sources go far beyond what
    Searchinger et al.\1\ and Fargione et al.\2\ have captured in their
    analyses, and therefore regulation on this ``partial truth'' basis is
    wrong. A first step in the right direction might be to charge fuels for
    their direct GHG emissions--this would still drive us toward better
    solutions--but in a more rational manner.
    ---------------------------------------------------------------------------
        \1\ Searchinger, T., Heimlich, R., Houghton, R. A., Dong, F.,
    Elobeid, A., Fabiosa, J., Tokgoz, S., Hayes, D., and Yu, T.-H. (2008)
    Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through
    Emissions from Land-Use Change, Science 319 (5867) pp. 1238-1240.
        \2\ Fargione, J., Hill, J., Tilman, D., Polasky, S., Hawthorne, P.
    (2008) Land Clearing and the Biofuel Carbon Debt, Science 319 (5867)
    pp. 1235-1238.
    ---------------------------------------------------------------------------
        Thank you for considering my comments. I would like to emphasize
    that they are mine alone, and not those of my university, institute, or
    department.
    [GRAPHIC] [TIFF OMITTED] 51922.019

    D Raj Raman, Ph.D., PE,
    Associate Professor, Agricultural & Biosystems Engineering,
    Associate Director of Educational Programs, Bioeconomy Institute,
    Iowa State University.
                                   Exhibit 20
    Comment Log Display
    Below Is The Comment You Selected To Display.
    Comment 5 For Low Carbon Fuel Standard (LCFS09)--45 Day.
    First Name: Richard
    Last Name: Ottinger
    E-mail Address: rottinger@law.pace.edu
    Affiliation: Dean Emeritus, Pace Law School

    Subject: Land Use Valuation for LCFS
    Comment:

        I strongly endorse the views expressed in the letter to The ARB
    submitted by Carol Werner, Executive Director of the Environmental and
    Energy Study Institute. While I am Chair of the EESI Board of
    Directors, I also am a Former Member of Congress (1964-1985), chairing
    its Energy, Conservation & Power Subcommittee; Faculty Member of Pace
    Law School and Chair of its Energy and Climate Center; and Chair of the
    Energy and Climate Specialty Group of the IUCN Commission on
    Environmental Law.
        The views expressed by Ms. Werner on the unreliability of land use
    valuations in determining the costs and benefits of bioenergy
    production are sound. There is no sound way of knowing what value to be
    placed on the indirect effects of land use on biofuels production in
    light of the inability to ascertain the effects of other land use
    demands. Also it is unwise to single out biofuels for such a valuation,
    ignoring the land use consequences of fossil fuel, nuclear and other
    energy resources; even solar and wind projects have land use
    consequences, equally unmeasurable.
        Bioenergy unfortunately has achieved strong negative bias from many
    environmental organizations because of the ill food effects of U.S.
    corn crop as a biofuel feedstock and the Indonesian catastrophe of
    using deforested areas and peat bog destructions to plant palm
    plantations for biodiesel. Standards need to be adopted to prevent such
    practices and are being developed, most particularly by the Roundtable
    on Sustainable Biofuels of the Ecole Polytechnique Federale de
    Lausanne. But putting a false value on land use just for Bioenergy,
    practically making it unmarketable, is bad energy and climate policy.
                Respectfully submitted

    Richard Ottinger,
    Dean Emeritus,
    Pace Law School.

    Attachment:
    Original File Name:
    Date and Time Comment Was Submitted: 2009-03-19 07:27:39
                                   Exhibit 21
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                                   Exhibit 22
    University of Illinois at Chicago
    Energy Resources Center (MC 156)
    College of Engineering
    April 15, 2009

    California Environmental Protection Agency,
    Air Resources Board,
    Byron Sher Auditorium, Second Floor,
    1001 I Street
    Sacramento, CA

    Subject: Comments on Corn Ethanol Land Use Change Analysis in the
    Proposed Regulation to Adopt the Low Carbon Fuel Standard

        Dear Air Resources Board:

        Page IV-19 of the ``Proposed Regulation to Implement the Low Carbon
    Fuel Standard'' states:

            ``A sufficiently large increase in biofuels demand in the U.S.
            will cause non-agricultural land to be converted to crop land
            both in the U.S. and in countries with agricultural trade
            relations with the U.S. Models used to estimate land use change
            impacts must, therefore, be international in scope''

        We disagree with the above statement and believe that a thorough
    regional analysis of direct and indirect land use change is superior to
    the employment of models that are international in scope. These
    international models require a host of input variables (some of which
    are shown in Table C5-1) with unknown probability distribution
    functions. A localized, or bottom-up modeling approach detailed below
    is superior and consistent with the look up tables provided in Table
    IV-20. The bottom up approach demonstrates that there is no reason why
    the ``Land Use or Other Effect'' values in the look up table cannot
    vary by pathway similar to ``Direct Emissions.''
        In most cases, ethanol plants source corn from localized,
    geographically distinct areas surrounding the plants. Our study at the
    Illinois River Energy Center (IRE) ethanol plant in Illinois which
    includes a survey of 30 growers delivering corn to this 58 mgpy plant
    shows that farmers deliver corn within a 40 mile radius ``corn draw
    area'' or ``CDA'' (see Mueller, October 2008). ProExporter Network, a
    grains flow consulting firm also regularly establishes CDA's based on
    local transport conditions and grain commodity prices. Since an ethanol
    plant's effect on corn supply starts with an easy to establish,
    geographically limited area we argue that any land use analysis of corn
    ethanol must start with an analysis of the yields, crop rotations, and
    land use conversions in that CDA.
        As a modeling example we assess land use for IRE's CDA using high
    resolution satellite imagery with additional vetting routines (see
    Mueller, December 2008). We find that (a) no significant conversion of
    non agricultural land to corn occurs, (b) yield increases surveyed for
    the CDA are sufficient to meet the ethanol plant's corn demand, and (c)
    changes in crop rotations are not explained by the ethanol plant's corn
    demand. The study concludes that the operation of the Rochelle Illinois
    ethanol plant does not contribute to land use change. Therefore,
    greenhouse gas emissions from IRE related land use change are
    insignificant. The lifecycle global warming analysis for IRE produced
    corn ethanol (including farming, conversion, distribution, denaturing)
    totals 54.8 gCO2e/MJ as established by parameterizing GREET
    for the surveyed agricultural practices in the CDA and IRE's corn
    processing technologies (N-inputs, yields, plant fuel and electric use,
    etc.). IRE started operation in December 2006 and the plant technology
    is representative of approximately 3 billion gallons of corn ethanol
    produced today.
        We realize that this is a case study of one particular plant. And,
    we do agree that a different ethanol plant built in a less productive
    agricultural area and different commodity flows may contribute to land
    use change. It follows that the share of land use effect from each
    ethanol plant differs from plant to plant but that these different
    shares cannot be captured by international trade models. High
    resolution satellite imagery is available to assess the land use effect
    for each plant from the bottom up. In contrast, high resolution
    satellite imagery is not available to model international land use
    change prompted by biofuels production (see Mueller, March 2009).
    Therefore, it is scientifically unsound to assign one land use effect
    value (30 gCO2e/MJ) to all corn ethanol produced, a value
    that is derived with an international trade model with input variables
    of unknown probability distributions.
        We are currently expanding our bottom-up modeling approach to
    include more ethanol plants. We urge CARB to provide a mechanism to
    allow individual ethanol producers to demonstrate their plant's impact
    on land use change.
                Best Regards,

    Steffen Mueller, Ph.D.,
    Principal Economist;
    Ken Copenhaver,
    Senior Engineer.

    Attached References:

        Mueller, S. and K. Copenhaver, M. Wander. ``The Global Warming
    Impact and Land Use Impact of Corn Ethanol Produced at the Illinois
    River Energy Center''; October 20, 2008.
        Mueller, S. and K. Copenhaver. ``A Bottom-Up Assessment of Land Use
    Related to Corn Ethanol Production''; December 11, 2008.
        Mueller, S. and K. Copenhaver. ``Use of Remote Sensing to Measure
    Land Use Change from Biofuels Production''; March 26, 2009.
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                                   Exhibit 23
    American Farm Bureau Federation
    March 25, 2009

    Hon. Arnold Schwarzenegger,
    Office of the Governor,
    State Capital,
    Sacramento, CA

    RE: Concerns Regarding Proposed LCFS Regulation

        Dear Governor Schwarzenegger,

        We are writing with regard to the proposed California Low Carbon
    Fuel Standard (LCFS). As you may know, the American Farm Bureau
    Federation (AFBF) is the unified national voice of agriculture, working
    through our grassroots organization to enhance and strengthen the lives
    of rural Americans and to build strong, prosperous agricultural
    communities.
        Increasing America's energy resources and protecting national
    security by reducing our dependence on foreign oil and continuing to
    grow our domestic renewable fuels industry are among the most important
    challenges facing our country. As farmers and ranchers we believe that
    we can play an important role in lessening our dependence on foreign
    oil. We are concerned, however, about the direction of the current LCFS
    proposal.
        From our understanding, the LCFS was originally intended to allow
    all eligible fuels to compete on a level, carbon-based playing field.
    There is widespread agreement in the scientific and research
    communities that biofuels produced from U.S. farms have significant
    benefits over petroleum and other fossil fuels like natural gas based
    on the ``cradle to grave'' carbon emissions associated with producing
    and using the fuel. For example, soybean-based biodiesel receives a CA-
    Greenhouse gasses, Regulated Emissions and Energy use in Transportation
    GREET carbon intensity score of 26 g/MJ, while corn-based ethanol
    receives a score of 67 g/MJ. Advanced biofuels like cellulosic ethanol
    and renewable diesel have even better carbon scores. These numbers are
    considerably lower than California gasoline and diesel, which CA-GREET
    scores at 96 g/MJ and 95 g/MJ, respectively.
        To be clear, the CA-GREET model accounts for the carbon emissions
    directly attributable to the full lifecycle of the respective fuel. For
    biofuels CA-GREET includes the application of fertilizer, and the land
    directly converted to produce biofuel feedstocks. For petroleum CA-
    GREET includes major upstream refinery emissions. In both cases,
    transportation and combustion of the fuel is included.
        Unfortunately, the Air Resources Board (ARB) is proposing to
    enforce an additional carbon penalty against biofuels only, increasing
    the carbon score of these fuels by 40 percent or more. ARB staff calls
    the penalty ``indirect land use change.'' The effect is a ``market-
    mediated'' or ``economic carbon effect'' derived by running estimated
    future biofuel demand through an economic model. The problem with this
    proposal is two-fold: (1) the science of predicting indirect,
    economically-derived carbon effects is extremely new and uncertain;
    and, (2) no level of certainty justifies enforcing economically-derived
    carbon effects against only one type of fuel.
        As to the issue of uncertainty, we note that 111 scientists
    submitted a letter detailing the state of the science and recommending
    against premature enforcement of indirect effects. We also point out
    that AIR, Inc. released a study showing that increasing corn ethanol
    production in 2015 to the same levels modeled by ARB results in zero
    indirect land use change based on updated treatment of biorefinery co-
    products and crop yields. It is particularly troubling to AFBF that the
    current model runs for indirect land use change do not include inputs
    for the use of land enrolled in the Conservation Reserve Program (CRP)
    and idle cropland. The omission of CRP and idle land is problematic
    because any farmer looking to produce additional biofuel feedstock is
    most likely to look first to idle cropland so as not to disrupt current
    cash flows. A land use assessment without this factor is quite simply
    not credible or based on real world decision-making.
        As to the issue of selectivity, it is clear that all fuels have
    market-mediated carbon effects. But only biofuel is penalized for
    indirect effects. As stated in the scientist letter, ``[e]nforcing
    different compliance metrics against different fuels is the equivalent
    of picking winners and losers, which is in direct conflict with the
    ambition of the LCFS.''
        It is important to note that U.S. farming practices continue to
    advance both in sustainability and productivity. According to the
    United States Department of Agriculture (USDA), in 2008 American
    farmers produced the second largest corn crop on record and attained
    the second highest yield per acre in history with fewer energy and
    fertilizer inputs. Also, the distillers grains that are a co-product of
    ethanol production are playing a major role in providing livestock--in
    the U.S. and abroad--with high-protein, nutrient rich feed.
        The agricultural community is eager to play a central role in the
    increased use of biofuels. However, if adopted as currently proposed,
    the LCFS will uniformly dissuade the production and use of all forms of
    biofuels that utilize land and undercut what is a tremendous
    opportunity to spur economic growth in agricultural communities and
    reduce carbon emissions with American farming.
        Several different stakeholder groups, including the 111 scientists
    who submitted a letter to your office on March 2, recommended that ARB
    adopt an LCFS regulation based only on direct carbon effects, or those
    emissions directly attributable to the production and use of the
    particular fuel, while taking the lead on the further assessment of the
    indirect carbon effects of all fuels. AFBF believes that a regulation
    based on direct effects will be balanced and represents the ``level
    playing field'' your office envisioned at conception of the program.
        Thank you for your time and consideration. AFBF appreciates this
    opportunity to comment on this vitally important program.
                Sincerely,
                [GRAPHIC] [TIFF OMITTED] 51922.102

    Bob Stallman,
    President.
                                   Exhibit 24
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                                   Exhibit 25
    Renewable Fuels Association
    April 17, 2009

    Mary D. Nichols,
    Chairwoman,
    California Air Resources Board,
    Headquarters Building
    1001 ``I'' Street,
    Sacramento, CA.

        Dear Chairwoman Nichols,

        The Renewable Fuels Association (RFA) respectfully submits the
    attached comments on the California Air Resources Board's (CARB)
    Proposed Regulation to Implement the Low Carbon Fuels Standard (LCFS).
        As the national trade association for the U.S. ethanol industry,
    RFA appreciates the opportunity to comment on the information presented
    in the documentation published March 5, 2009. As you will see in the
    attached comments, we have prepared detailed remarks about the land use
    modeling framework, key assumptions, and fundamental approach CARB is
    using for its current lifecycle analysis of ethanol. We also offer
    comments on other aspects of the regulation, such as the decision to
    include corn ethanol in the baseline gasoline formulation.
        In general, we continue to believe CARB's analysis of indirect land
    use change is insufficient. Ongoing scientific discourse and research
    clearly suggest we are not currently able to estimate indirect land use
    changes (particularly international land conversions) with an
    acceptable degree of certainty. Additionally, we continue to believe
    the Global Trade Analysis Project (GTAP) model employed by CARB for
    this analysis requires significant refinement and validation before it
    can be reasonably used in the development of a policy framework such as
    the LCFS. Our attached comments are quite detailed in this regard, as
    we have been independently experimenting with the GTAP model and
    interacting with other GTAP modelers for much of the last year.
        Among the major concerns we have with the GTAP modeling used to
    produce the results presented in the Initial Statement of Reasons are:
    inconsistency of projected average grain yields and the period of the
    ``shock''; underestimation of the significant land use ``credit''
    provided by distillers grains (the feed co-product of grain ethanol);
    and assumptions on carbon emissions from converted forest. Several
    other concerns are discussed as well.
        Our attached comments show that GTAP modeling runs with reasonable
    adjustments to certain assumptions performed by Air Improvement
    Resource, Inc. results in corn ethanol ILUC emissions in the range of 8
    g CO2-eq./MJ. This is significantly lower than CARB's
    current estimate of 30 g CO2-eq./MJ.
        We sincerely appreciate CARB's consideration of these comments and
    look forward to further interaction with the agency as it continues
    development of the LCFS regulation. We welcome further dialog and look
    forward to responses to any of the comments offered in the attached
    documentation. We will continue to analyze the GTAP model, review the
    information provided by CARB, and respond with comments as appropriate.
                Sincerely,
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    Bob Dinneen,
    President & CEO,
    Renewable Fuels Association.
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                              Submitted Questions
    Responses from Joseph Glauber, Ph.D., Chief Economist, U.S. Department
            of Agriculture
    Questions Submitted By Hon. Tim Holden, a Representative in Congress
            from Pennsylvania
        Question 1. Have you discussed who's going to determine questions
    like whether land was ``cleared'' prior to passage of EISA (energy bill
    from 2007)?
        Answer. USDA discussed many issues with EPA including analysis,
    assumptions, land types, record-keeping, where biomass would be
    produced, and who/what entity should be responsible for validating or
    verifying that biomass was produced from planted crops and crop residue
    harvested from agricultural land cleared or cultivated at any time
    prior to the enactment of the EISA that is either actively managed or
    fallow, and non-forested. Discussions also included history of land use
    and potential data available to verify management and usage.

        Question 2. Are you familiar with the recent International Energy
    Agency report? Do you concur with their assessment that ``As
    governments around the world try to establish the greenhouse gas
    emission benefits of various biofuels, the use of methodologies such as
    default emission factors could lead to a significant underestimation of
    the benefits unless the factors are updated on a frequent basis.''?
        Answer. I am not sure to which report of the International Energy
    Agency (IEA) that you refer; however, I do agree with the statement
    that it will be necessary to update greenhouse gas (GHG) emission
    factors as new information becomes available. Updating the models with
    more precise information will increase the ability of the models to
    accurately estimate the effects of expanding biofuels production on GHG
    emissions. I have no basis to conclude whether such updates will
    increase or reduce the estimates of GHG emissions from biofuels.

        Question 3. The estimates for the indirect emissions as measured by
    the Searchinger study and the Global Trade and Analysis Project (GTAP)
    are vastly different. How sensitive are these models to assumptions
    made? What uncertainty does this mean for the biofuel industry, or
    investors concerned with compliance issues under the renewable fuel
    standard?
        Answer. The summary below compares the Searchinger study and the
    GTAP analysis (Land Use Change Carbon Emissions Due To Ethanol
    Production, by Wallace E. Tyner, Farzad Taheripour, and Uris Baldos,
    January 2009). The comparison focuses on the 30 year ethanol case with
    no restriction on U.S. exports to be consistent with Searchinger's
    assumption on the duration of ethanol production. As indicated by the
    following discussion, the results are very sensitive to the models used
    in the analysis and the assumptions made by the researchers.
        The Searchinger study estimates that each gallon of ethanol
    generates 8,577 grams of GHG emissions through land use changes. This
    figure is roughly four times the estimate from the GTAP analysis. The
    difference is due to three factors. The first factor is how much land
    use change would occur in response to the increase in ethanol
    production. The Searchinger study suggests that land use would change
    by 0.73 hectares of land per 1,000 gallons of ethanol, while the GTAP
    analysis estimates the change in land use would amount to 0.27 hectares
    per 1,000 gallons of ethanol.
        The second factor is related to the location of changes in land
    use. The Searchinger study suggests that land use changes would occur
    mainly in areas where carbon emissions factors from land use changes
    are relatively high; while the GTAP predictions indicate that land use
    changes would take place in areas where carbon emissions from land use
    changes are much more modest. Lastly, the GTAP analysis assumes that 75
    percent of carbon stored in forest type vegetation would be released
    into the atmosphere at the time of land conversion, while Searchinger
    assumes that 100 percent of the carbon would be released. GTAP analysts
    argue that it is reasonable to assume that some of the carbon currently
    stored in trees on converted forestland would be sequestered in lumber
    for furniture, houses, and other wood products.

        Question 4. EPA is required to formulate and update assessments of
    the lifecycle emissions for biofuels. In general, how might carbon
    reduction legislation or renewable energy standards affect this
    lifecycle analysis? Would competition for feedstocks from another
    legislative standard, say a renewable electricity standard, change the
    emissions lifecycle for existing plants or practices? Likewise if
    Brazil cracked down on illegal logging, could that change a lifecycle
    analysis for a biofuel produced in the U.S.?
        Answer. A renewable electricity standard could create new markets
    for biomass feedstocks, altering land competition and land use
    dynamics. Additionally, changes in policies in other countries, such as
    Brazil cracking down on illegal land conversion, would significantly
    alter how land markets in these countries respond to the changes in
    commodity prices. It will be important to incorporate changes in
    policies, including carbon reduction legislation, and programs into the
    coefficients researchers use to calculate emissions from international
    indirect land use changes. At this time, USDA has not determined how
    the carbon reduction legislation being considered by Congress would
    affect the lifecycle analysis for biofuels. However, we believe that
    EPA should include the effects of carbon reduction legislation in the
    lifecycle analysis of biofuels--if these effects are significant--and
    if such legislation is passed by Congress prior to EPA's issuance of a
    final rule implementing the renewable fuel standard in the EISA.

        Question 5. During the interagency process it is my understanding
    that USTR was involved in the discussions. What was their concern? Do
    you think that the inclusion of indirect land use will impact the
    international climate dialogue?
        Answer. I am unaware of specific concerns. I do not believe the
    inclusion of indirect land use in the lifecycle analysis of biofuels
    will affect the international climate dialogue.

        Question 6. U.S. corn acres are projected to fall for the second
    year in a row in 2009, despite projected record levels of grain ethanol
    production. At the same time, U.S. soybean planted acres are expected
    to achieve a new record. This trend appears to run counter to the
    theory that increases in corn ethanol production would cause a
    ``gobbling up'' of soybean acres and force that soy production
    elsewhere in the world. How do you account for this?
        Answer. Over the past couple of years, soybean prices have been
    running relatively strong compared to corn and other major crop prices.
    Major factors contributing to the strength in soybean prices include a
    short 2008 crop in Argentina and continued strong demand by China for
    soybeans. As a consequence, even though the demand for corn for ethanol
    production is projected to rise about nine percent in the coming
    marketing year, the profitability outlook for soybeans is enticing U.S.
    farmers to plant more beans and less corn and other crops.

        Question 7. Without a doubt, crop yield improvements play a
    significant role in mitigating the need to expand agricultural lands.
    Can you elaborate on the remarkable increases in productivity witnessed
    not only in the U.S., but in other nations, over the last 25 years and
    comment on how that impacts land use decisions?
        Answer. As you note, crop yields in the United States have
    increased significantly over the last 25 years. Globally, crop
    productivity has expanded as well. Since the early 1980s, U.S. corn
    yields have increased from about 110 bushels per acre to 153.9 bushels
    per acre in 2008, a 40 percent increase. World corn yields expanded by
    62 percent between 1980 and 2008, with Brazil's, China's, and the
    European Union's corn yields increasing by a total of 103, 83, and 53
    percent, respectively. As yields increase over time, less land would be
    needed for the production of energy crops to fulfill the renewable fuel
    standard in the EISA.

        Question 8. What are your thoughts in regard to what's been taking
    place in Brazil? What type of agricultural production was expanding
    where?
        Answer. The Amazon rainforest covers more than 500 million hectares
    or over \2/5\ of the South American continent. Over 20 percent of the
    Amazon rainforest has been converted to roads, farms, ranches, and
    dams. It is estimated that 2.7 million acres each year are being
    cleared for logging timber, large-scale cattle ranching, mining
    operations, government road building and hydroelectric plants, military
    operations, and subsistence farming by peasants and landless settlers.
    In many places, the rainforest is being burnt to provide charcoal to
    industrial plants that have been built on converted rainforest lands.
        Brazilian crop and livestock agriculture has been expanding. Major
    field crop acreage (barley, corn, cotton, oats, soybeans, cottonseed,
    peanuts, sunflower seed, milled rice, rye, and wheat) rose from 33.4
    million hectares in 2000 to a peak in 2004 of 43.8 million hectares.
    Since 2004, major crop acreage has fluctuated from a low of 41.9
    million hectares to an estimated high for 2009 of 43.7 million
    hectares.
        The soybean area harvested peaked in 2004 at 22.9 million hectares.
    Since 2004, soybean area harvested in Brazil has declined to a recent
    low of 20.7 million hectares in 2006. In 2008, 21.4 million hectares of
    soybeans were harvested in Brazil. While the soybean harvested area in
    Brazil declined from 2004 to 2008, ethanol production in the United
    States increased from 3.4 billion gallons in 2004 to 9.2 billion
    gallons in 2008.
        Brazilian animal agriculture has shown robust growth with total
    cattle numbers, measured by inventory, rising steadily from 146.2
    million head in 2000 to more than 179.5 million head in 2009. Similarly
    for swine inventory, stock has grown from 31.9 million head to 33.3
    million head in 2009. Unlike cattle, the swine industry does exhibit
    some contraction on a year over year basis, but has clearly expanded
    since 2000.

        Question 9. You don't specifically mention it in your written
    testimony's discussion of the uncertainty of determining yields on
    recently converted land, but isn't that one of the points of the
    Searchinger, et al. paper? That recently converted land will have much
    lower yields?
        Answer. The yield on recently converted land is a source of great
    uncertainty, Land productivity depends on a number of factors such as
    climate, slope, soil type, salinity, and water availability (natural
    precipitation or availability of irrigation water). In addition,
    farming practices, such as fertilizer application rates and use of
    biotech seeds, vary greatly around the world. Thus, assumptions on the
    location of converted land and the productivity of that land are very
    important parameters in the Searchinger study and in other studies that
    provide estimates of the effects of biofuels production on GHG
    emissions.

        Question 10. In your testimony you stated that the definition of
    renewable biomass in the RFS will limit the opportunity for biofuels to
    replace fossil fuels. Can you elaborate why? And do you think that
    definition of renewable biomass could be expanded to be more exclusive
    and also be environmentally responsible?
        Answer. The term renewable biomass is defined differently in
    various pieces of legislation. The definition of ``renewable biomass''
    in the Food, Conservation, and Energy Act of 2008 includes all
    materials that are byproducts of preventative treatments on National
    Forest System lands. Preventative treatments include the removal of
    trees and other materials to reduce hazardous fuels, reduce or contain
    disease or insect infestation, or restore ecosystem heath. In contrast,
    the definition of ``renewable biomass'' in the EISA excludes these
    materials. I believe this is one instance in which the definition of
    ``renewable biomass'' in the EISA could be expanded without causing
    environmental harm. There are possibly other examples in which the
    definition of ``renewable biomass'' could be broadened without causing
    environmental damage.

        Question 11. Why do you think the European Union has not used
    indirect emissions as part of their programs?
        Answer. While I have not spoken with representative from the
    European Union on this topic, my understanding is that they have
    decided not to include indirect land use in their current regulations
    but will review the issue over the next 2 years.

        Question 12. Specifically, what parts of the EPA rule on the RFS
    did you discuss with the EPA? (Indirect emissions, international land
    use changes, the definition of agricultural land, agricultural
    production outlooks . . .)?
        Answer. USDA discussed several aspects of the RFS2 EPA rule related
    to agriculture, including international land use changes, the
    definition of agricultural land, outlook for agricultural production
    and exports, fertilizer application rates, fertilizer requirements when
    removing corn stover, and forest management. In addition, we discussed
    the current conversion technology used by the U.S. corn ethanol
    industry, including ethanol yield, the production of Distillers Dried
    Grains (DDGS), and the feed nutritional benefits of DDGS, industry
    capacity, and production costs. We also discussed the supply potential
    of using other feedstocks for ethanol, such as sugarcane, sorghum, and
    wheat.
        In addition, we discussed the economic and technical feasibility of
    producing ethanol from biomass. A considerable amount of time was spent
    discussing the potential supply of biomass, the most economical sources
    of biomass, and the logistics of shipping and storing biomass.

        Question 13. Do you agree with the research done in the 2008
    Searchinger paper published in Science?
        Answer. There is little question that increased biofuel production
    will have effects on land use in the United States and the rest of the
    world. The more interesting question concerns magnitude. To the degree
    to which the supply response to increased biofuel production is met
    through increased yields, cropland expansion will be less. Land use
    change is more likely to occur where producers are more responsive to
    price changes. How much pasture and forest is converted to cropland
    will ultimately depend on the region, national and local land use
    policies and the degree to which competing uses (grazing, forest
    products) impose constraints for expansion.

        Question 14. In the last few weeks the California Air Resources
    Board adopted a rule that uses indirect emissions as part of their low
    carbon fuel standard. What affect do you think this will have on the
    market for biofuels in California, and on biofuel producers nationwide?
        Answer. The California low carbon fuel standard (LCFS) could
    potentially reduce the use of corn ethanol in California. Under the
    rule adopted by the California Air Resources Board, Midwest corn
    ethanol has higher GHG emissions than reformulated gasoline. This would
    make Midwest corn ethanol an unattractive source for California fuel
    blenders. However, the California Air Resources Board has indicated
    that it will review the parameters and models used to develop the
    emissions estimates for corn-based ethanol and other biofuels. Thus, at
    this point, it is very hard to say how the market for biofuels will
    ultimately be affected by the rule adopted by the California Air
    Resources Board.

        Question 15. In your testimony you stated that the literature on
    biofuel production and international land use has developed largely
    over the past 5 years, with most of the research on this being done for
    the domestic market, how can we build models that incorporate the
    international changes when there isn't adequate data?
        Answer. Acquiring international data to help model the effects of
    land use change is a major issue. There are three primary factors that
    affect international land use change: economic, political, and
    cultural. Most U.S. models that estimate the effects of increasing
    biofuels on land use change rely on economic data, but some economic
    data simply does not exist in many of the countries where land use
    change is occurring or expected to occur as biofuel production expands.
    While we have some experience with international agricultural models,
    we have far more limited understanding of international land use of
    pasture, rangeland and forests. For example, USDA and the Food and
    Agriculture Policy Research Institute (FAPRI) both prepare 10 year
    baselines of projected cropland use. We have not developed similar
    baselines for pasture and forestland.

        Question 16. Furthermore you stated in your testimony that ``the
    empirical literature on land use and greenhouse gas emissions is
    relatively young with most studies appearing in the last 2 or 3
    years.'' Is it responsible for expansive Federal policy such as the RFS
    to be dependent on such nascent science? Do you believe there will be a
    time when we will have a scientific consensus for this issue?
        Answer. Lifecycle analysis (LCA) has historically been used to make
    comparisons at a point in time, e.g., comparing the environmental
    benefits of a biofuel versus a petroleum fuel. Previous LCA of biofuels
    has not considered significant indirect impacts so EPA and others have
    combined LCA models with economic models to help estimate the effects
    of the RFS2 on land use change. While there is little doubt that
    increased biofuel production will have effects on land use in the
    United States and the rest of the world, there are uncertainties in the
    magnitude. Data on production, input use, historical and current land
    use, and distribution of land by type, for most developing and emerging
    economies is poor to non-existent. The empirical literature on land use
    and GHG emissions is relatively young, with most studies appearing in
    the last 2 or 3 years. Sensitivity analysis suggests wide variation in
    results. Key sources of uncertainties in these analyses include:

       The amount of change in land use;

       Differences in the sources of land being converted and the
            part of the world the where the change in land use occurs; and

       Differing assumptions regarding the percent of carbon stored
            in forest vegetation that is emitted when forest is converted
            into cropland.

        In addition to the analytic uncertainties, there are also questions
    about the policy response of governments to land conversion. To the
    degree to which the supply response to increased biofuel production is
    met through increased yields, cropland expansion will be less. How much
    pasture and forest is converted to cropland will ultimately depend on
    the region, national and local land use policies, and the degree to
    which competing uses (grazing, forest products) impose constraints for
    expansion.

        Question 17. Can you explain the role Distillers Dried Grains
    (DDGS) and other co-products play in a lifecycle emission analysis?
        Answer. For every bushel of corn converted to ethanol in a dry mill
    plant, about 17.5 pounds (\1/3\ of a bushel equivalent) of DDGS (27
    percent protein) is produced. DDGS have feeding value and may be used
    to replace corn and soybean meal in feed cattle and dairy feed rations.
    Small amounts of DDGS can also be used in hog and poultry feed rations.
    On a feed value basis, 1 pound of DDGS could replace up to 1.27 pounds
    corn and soybean meal in livestock rations, though for nutritional
    reasons, DDGS can only replace a portion of the corn and soy fed to
    livestock (Argonne National Lab). Since DDGS has value as a livestock
    feed, researchers have generally agreed that the lifecycle analysis
    should at least allocate a portion of the emissions produced in ethanol
    production process to DDGS.
        In a lifecycle emission analysis (LCA), GHG emissions need to be
    allocated to all end products not just ethanol. There are a number of
    ways various researchers have allocated GHG emissions, such as energy
    content of ethanol versus DDGS, mass basis (weight of ethanol versus
    weight of co-products), displacement/replacement approach, and the
    ASPEN Plus Model which estimates the energy used in every stage of the
    production process (i.e., energy used to dry DDGS assigned to DDGS).
    Each of these different approaches for allocating emissions between
    ethanol and DDGS yield different estimates of lifecycle emissions
    attributed to ethanol.

        Question 18. Your testimony highlighted timeframe assumptions in
    emission models as an area of uncertainly. How does the timeframe a
    model uses affect the results? Why are these assumptions important?
        Answer. GHG emissions associated with land use change result from
    releases of much of the carbon into the atmosphere that was previously
    stored in the soil. These emissions can be viewed as one-time events
    that typically occur when lands shift from pasture, grassland, or
    forest into crop production. Hence, emissions related to bringing new
    land into production are generally concentrated in the year of
    conversion and the first couple years thereafter, creating what is
    referred to in the literature as a ``carbon debt''. In contrast,
    growing biofuel feed stocks offsets the use of fossil fuels and removes
    carbon dioxide from the atmosphere which overtime can offset the
    upfront ``carbon debt'' associated with land use change.
        Using a shorter timeframe for the lifecycle analysis makes it less
    likely that the ``carbon debt'' created for keeping newly converted
    land in crop production will be offset by the annual carbon emission
    benefits of growing crops for biofuel production. Thus, the shorter the
    timeframe the more likely ethanol and other biofuels will not achieve
    the GHG emissions reduction targets contained in the EISA.
    Questions Submitted By Hon. Stephanie Herseth Sandlin, a Representative
            in Congress from South Dakota
        Question 1. Would you agree that even the best available
    methodologies and models have proven to be significantly imprecise in
    predicting indirect land use changes?
        Answer. Models are representations of reality and will not
    replicate reality with 100 percent certainty. Second, it is important
    to recognize that the questions being asked of these models may not be
    the types of questions that the models were originally intended to
    answer. Third, a number of factors are driving land use change not only
    in the United States, but around the world: factors such as population
    growth and urban encroachment; economic development; agriculture and
    forestry production; and policy to mention a few. In reality, we do not
    know at this point in time how precise or imprecise these model
    forecasts or projections are to predict direct and indirect land use
    changes, land conversion, and GHG emissions on a global scale, though
    we know some of the major sources of uncertainty.

        Question 2. Would you also agree that we will need the most current
    economic and agricultural data available to arrive at a level of
    consensus on approaches to determining indirect effects?
        Answer. The more current the data, the better the analysis should
    be. For example, a snap shot of satellite images for two points in time
    2001 and 2004 was used by Winrock International to determine what types
    of land (e.g., forest or grassland) are cleared when agricultural
    production expands. These data show crop expansion by type of land due
    to political, economic, social and a variety of other factors. The
    factors driving land use change from 2001 to 2004 are not necessarily
    the same factors driving land use change between 2005 and 2008.

        Question 3. Do you believe that USDA has available to it the
    resources necessary to initiate a research effort that fairly
    determines such indirect effects?
        Answer. USDA has a limited number of models that can partially
    address some of the issues dealing with land use change. We believe the
    best path for moving forward is to continue to work collaboratively
    with EPA, DOE and the academic community to further refine existing
    models to address land use changes. This would be the most expedient
    process for developing a consensus on the effects of biofuels on land
    use.

        Question 4. Is there additional support that Congress can provide,
    and specifically, we on the Agriculture Committee? For instance, would
    some additional appropriations for USDA for this purpose in Fiscal Year
    2010 be needed in order to accurately resolve these issues as quickly
    as possible?
        Answer. We believe the best path for moving forward is to continue
    to work collaboratively with EPA, DOE and the academic community to
    further refine existing models to address land use changes. In
    addition, the Administration's FY 2010 budget proposal would provide an
    additional $5 million to the Office of the Chief Economist for climate
    work. Some of this funding would be used to address land use issues.
    Questions Submitted By Hon. Deborah L. Halvorson, a Representative in
            Congress from Illinois
        Question 1. Dr. Glauber, do you feel that U.S. policy on renewable
    fuels are the sole influencer of land use change in other countries
    such as the deforestation occurring in Brazil? What do you believe are
    the other variables that need to be analyzed? Do you feel we have
    models today that can accurately do this? Do you feel that crude oil
    prices have an effect? How large?
        Answer. U.S. renewable fuels policy is not the sole influence of
    land use change in Brazil and other countries in the world. There are
    many factors that influence land use change in other countries besides
    U.S. policy on renewable fuels. The rainforest in Brazil is being
    destroyed and fragile lands elsewhere are being converted to cropland
    due to political, social, and economic reasons. In Brazil, the
    rainforest is being cleared for logging timber, large-scale cattle
    ranching, mining operations, government road building and hydroelectric
    plants, and subsistence agriculture.
        It is clear from the analyses that land conversion is sensitive to
    many variables--some of which can be influenced by government policies
    or actions. To the degree to which the supply response to increased
    biofuel production is met through increased yields, cropland expansion
    will be less. How much pasture and forest is converted to cropland will
    ultimately depend on the region, national and local land use policies
    and the degree to which competing uses (grazing, forest products)
    impose constraints for expansion.
        The models that we currently have are limited in their ability to
    estimate direct and indirect land use change associated with biofuels
    production. This assessment is based on the lack of data and definitive
    analysis of the factors affecting global land use changes. This lack of
    data and analysis leads to widely varying differences on the effects of
    U.S. biofuels policy on land use. However, the analysis does focus
    exclusively on the changes in land use caused by U.S. renewable fuels
    policy; projections about other economic, political, and cultural
    trends that might affect future land use are reflected in the model
    baselines.
        Oil prices do have some affect on land use. Higher oil prices lead
    to higher prices for gasoline, diesel fuel, and other energy related
    production inputs. Generally, we would expect producers to respond to
    higher production costs by reducing acreage planted but when oil prices
    are high, the demand for alternative energy sources rises pushing up
    the price of crops used to produce biofuels. Due to the offsetting
    effects of higher oil prices on production costs and the prices of
    crops used to produce biofuels, the effects of crude oil prices on land
    use are expected to be relatively small.

        Question 2. Dr. Glauber, USDA has a wealth of global data to
    predict future trends in agriculture. Does USDA have the computer
    models sophisticated enough that you would be willing to build
    regulations on their predicted results around the indirect land use
    changes of renewable fuels?
        Answer. While USDA has developed numerous models over the years to
    examine specific issues that are germane to these topics, we do not
    have an integrated, interdisciplinary model(s) or modeling system to
    address global land use changes issues of the sort addressed in the
    proposed RFS2 rule. We have drawn heavily on the work of other
    researchers. EPA's analysis uses a suite of models to address the issue
    of indirect land use change.

        Question 3. Dr. Glauber, do you believe that through technology
    improvements that crop yields in not only the U.S. but the world will
    continue to increase?
        Answer. We continue to see remarkable gains in crop productivity
    both in the United States and globally through the application of
    biotechnology and conventional plant breeding. For most crops, yields
    in the United States are well above those in the rest of the world.
    Nevertheless, foreign crop producers are continuing to adopt new seeds
    and improved farming methods that will allow them to boost yields over
    the coming years. Higher commodity prices and returns to farming will
    support these advances.

        Question 4. How will USDA address the lack of scientific
    understanding of how to measure the sustainability of biofuels,
    including indirect land use change? How can USDA help advance
    scientific analysis to address the scientific uncertainties that are
    inherent in trying to evaluate international land use issues related to
    biofuels production?
        Answer. We do need to develop better models for measuring the
    sustainability of biofuels, include indirect land use change. USDA will
    continue to work on these issues in conjunction with the academic
    community, the U.S. Department of Energy, the U.S. Environmental
    Protection Agency, and other stakeholders interested in advancing the
    science of measuring the sustainability of biofuels. In recent years,
    USDA economists and scientists have participated in a number of
    workshops and have been involved in research projects to evaluate the
    current state of knowledge and identify the research needed to more
    accurately measure the effects of biofuels on indirect land use change
    and GHG emissions.

        Question 5. From a rural development and agricultural management
    point of view, how can USDA help maximize the sustainability of
    biofuels?
        Answer. USDA can maximize the sustainability of biofuels by
    continuing to put emphasis on research programs that boost agricultural
    productivity, increase energy efficiency, and lead to advances in
    agricultural management practices that promote sustainable resource
    use. In addition, we must continue to develop partnerships with the
    Department of Energy and other stakeholders to ensure that we are all
    working together to accelerate the commercialization of more efficient
    biofuel conversion technologies and next-generation biofuels.

        Question 6. The biotechnology industry has played a key role in
    increasing crop yields, developing enzymes for advanced biofuels,
    ethanologens for sugar conversion, algal systems, and new processes to
    make biobutanol and green gasoline. How will you further incorporate
    modern biotechnology into the USDA mission?
        Answer. USDA research programs have been very successful in
    increasing crop yields, developing new farming methods that are more
    sustainable, and creating more efficient processes for converting
    crops, crop residues, and other feed stocks into biofuels. The Obama
    Administration is committed to continuing this important research that
    is essential to reducing our dependence on foreign oil sources,
    reducing GHG emissions, and mitigating the effects of climate change.
    USDA scientists, in coordination with researchers from the private
    sector, will continue their commitment to developing new seed varieties
    and sustainable management practices that will enable the agriculture
    sector to produce food to feed a growing population and energy that is
    less polluting and less dependent on foreign sources.

        Question 7. At least for the last 30 years world crop acreage has
    been steadily going up while the U.S. crop acreage for the most part
    has been flat. In this past year U.S. acreage went up 7 million acres
    and the world went up 57 million acres. How could a 7 million rise in
    crop acreage in the U.S. cause a 57 million acre rise in the world? For
    2009 U.S. crop acreage actually went down, did the world crop acreage
    fall?
        Answer. The rise in world crop acreage in 2008 was driven by the
    very same forces that drove acreage higher in the United States.
    Producers throughout the world responded to sharply higher prices for
    most commodities in the fall of 2007 and spring of 2008 by planting
    more acreage. Our estimates of 2008 harvested area for grains,
    oilseeds, and cotton, suggest that the relative increase for the United
    States, at 2.5 percent, was actually larger than that for the rest of
    the world, at 0.9 percent. USDA's world crop area numbers for 2009 are
    still relatively tentative with planting of summer crops still ongoing
    in the Northern Hemisphere and planting for 2009 crops in the Southern
    Hemisphere still months away. Again, based on our projections of
    harvested area for grains, oilseeds, and cotton, world crop area is
    expected to increase in 2009, but by less than half of one percent.
    Offsetting increases in the rest of the world, area in the United
    States is expected to fall by about four percent, primarily reflecting
    reduced plantings of winter wheat last fall.
    Responses from Margo T. Oge, Director, Office of Transportation and Air
            Quality, Office of Air and Radiation, U.S. Environmental
            Protection Agency
    Questions Submitted By Hon. Tim Holden, a Representative in Congress
            from Pennsylvania
        Question 1. Have you discussed who's going to determine questions
    like whether land was ``cleared'' prior to passage of EISA (energy bill
    from 2007)
        Answer. We have crafted the RFS2 proposal in such a way as to
    implicitly address the issue of whether agricultural land or land on
    which tree plantations are situated had been cleared prior to passage
    of EISA. We have proposed to define the term ``existing agricultural
    land'' as cropland, pastureland, or Conservation Reserve Program land
    that existed as of December 2007 (and continuously thereafter). As long
    as land was being used as cropland, pastureland, or CRP land on
    December 2007, we would presume it to have been cleared (or cultivated)
    prior to December 2007. Likewise, we have proposed to define the term
    ``actively managed tree plantation'' to mean tree plantations that
    existed as of December 2007 (and continuously thereafter). Again, we
    would presume that a tree plantation that can satisfy our proposed
    definition for ``actively managed tree plantation'' would automatically
    satisfy the requirement that it have been cleared prior to passage of
    EISA.
        We have proposed that the responsibility for verifying that
    feedstocks come from ``existing agricultural land'' or ``actively
    managed tree plantations'' falls on the renewable fuel producer and
    that they acquire and maintain documentation from their feedstock
    producers to support their claims. This documentation would be reviewed
    as part of the producer's annual audit (``attest engagement''), and EPA
    would conduct any supplemental oversight or auditing if inconsistencies
    were reported based on that audit.

        Question 2. Are you familiar with the recent International Energy
    Agency report? Do you concur with their assessment that ``As
    governments around the world try to establish the greenhouse gas
    emission benefits of various biofuels, the use of methodologies such as
    default emission factors could lead to a significant underestimation of
    the benefits unless the factors are updated on a frequent basis.''?
        Answer. EPA is familiar with the recent International Energy Agency
    report ``An Examination of the Potential for Improving Carbon/Energy
    Balance of Bioethanol'' under IEA Task 39 Commercializing 1st and 2nd
    Generation Liquid Biofuels from Biomass.
        The paragraph to which the question refers suggests that lifecycle
    greenhouse gas assessments should consider future developments in
    addition to historical data. EPA has worked with the U.S. Department of
    Agriculture, the U.S. Department of Energy, and industry experts to
    incorporate technology improvement projections (e.g., biorefinery
    efficiency improvements, agricultural yield improvements) and
    socioeconomic trend projections (e.g., food consumption, GDP,
    population growth) into the lifecycle in order to account for expected
    future developments. EPA will continue to refine data and assumptions
    in coordination with other Federal departments and other experts as we
    progress to the final rulemaking. Additionally, following publication
    of the final rule we will continue to update our methodology to
    incorporate new information and advancements.

        Question 3. The estimates for the indirect emissions as measured by
    the Searchinger study and the Global Trade and Analysis Project (GTAP)
    are vastly different. How sensitive are these models to assumptions
    made? What uncertainty does this mean for the biofuel industry, or
    investors concerned with compliance issues under the renewable fuel
    standard?
        Answer. It is true that models are sensitive to certain key inputs,
    like crop yields. This is one reason why EPA's proposal identifies and
    conducts sensitivity analyses around these key inputs. In addition, we
    are working with numerous scientists and stakeholders and conducting
    peer reviews to ensure that we use the best available data in our
    modeling through an open transparent process. The intent of this
    process is to ensure a final rulemaking that provides clarity and
    stability for the biofuels industry.
        It is also important to note that regardless of the models and
    assumptions used in the many studies that have been conducted to date
    on lifecycle analysis, a number of studies have shown that indirect
    land use emissions comprise a significant portion of the total
    lifecycle emissions of some biofuel pathways. Therefore, these impacts
    should be accounted for in order to ensure an accurate and
    scientifically credible assessment of the GHG impact of renewable
    fuels.

        Question 4. EPA is required to formulate and update assessments of
    the lifecycle emissions for biofuels. In general, how might carbon
    reduction legislation or renewable energy standards affect this
    lifecycle analysis? Would competition for feedstocks from another
    legislative standard, say a renewable electricity standard, change the
    emissions lifecycle for existing plants or practices? Likewise if
    Brazil cracked down on illegal logging, could that change a lifecycle
    analysis for a biofuel produced in the U.S.?
        Answer. Policy developments such as those described above are
    important to consider. The Agency has incorporated current policy
    regimes into the proposed lifecycle analysis. For example, we are
    working closely with experts in Brazil to ensure that Brazil's land use
    and enforcement policies are appropriately incorporated into the
    lifecycle models. EPA has met with experts and representatives from
    other countries (e.g., EU countries, Argentina) regarding their current
    biofuel and agricultural policies to accurately inform our models and
    have consistently invited countries and foreign companies inquiring
    about renewable fuels to share data and policy information with us for
    analytical refinement.
        Moreover, should significant policy developments occur in the
    future that would impact the lifecycle analysis, we will update our
    lifecycle analysis accordingly. However, we feel it is not appropriate
    to attempt to predict and incorporate future policy passed by Congress
    or other countries into the lifecycle analysis.

        Question 5. During the interagency process it is my understanding
    that USTR was involved in the discussions. What was their concern? Do
    you think that the inclusion of indirect land use will impact the
    international climate dialog?
        Answer. EPA continues to work with USTR and other agencies to
    ensure that the RFS rule will comply with all trade obligations.

        Question 6. While the focus of this hearing is mostly on ILUC, can
    you elaborate on the findings of EPA's DIRECT emissions lifecycle
    analysis for ethanol? I understand your agency's analysis showed that
    most ethanol offers an approximate 50% reduction in direct GHG
    emissions relative to petroleum than previously believed. Can you
    elaborate on the reasons for this reduction being greater than previous
    EPA estimates?
        Answer. If indirect land use change is excluded from the analysis,
    most corn ethanol offers an approximately 50% reduction in GHG compared
    to petroleum gasoline. However, this is not an indication of direct
    impacts. Our methodology includes both direct and indirect impacts
    together. The indirect impact modeling accounts for land use change, as
    well as other ``positive'' indirect impacts in terms of biofuels GHG
    emissions, such as reductions in livestock emissions and shifting of
    crop production to regions with lower GHG impacts. Therefore it is
    important to consider the results with all indirect impacts, including
    indirect land use change. Inclusion of these ``positive'' indirect
    impacts was not done in our previous analyses. We also project
    advancements in ethanol energy efficiency that result in lower
    estimates of emissions than previously considered.

        Question 7. I understand EPA relied on satellite data and imagery
    from 2001-2004 to estimate the types of lands that might be converted
    as a result of U.S. biofuels expansion. While this data might be
    helpful in determining what types of land were converted to other uses
    during a brief period at the beginning of this decade, I'm assuming
    this data does not provide any insight into the CAUSE of the land
    conversion. Is that correct?
        Answer. The satellite data is not used to attribute unique causes
    to each instance of land conversion, but rather, it allows us to
    project the type of land converted into cropland for a variety of
    reasons. Our modeling assumes that the same mix of land types will be
    converted to cropland in the future if demand for cropland increases.
    We use economic modeling to predict how changes in demand for crops
    determine the amount of new cropland that will result. Thus, in our
    analysis, the causes of crop expansion are captured with economic
    modeling. We rely on well-established economic models to project the
    amount of crop expansion in each country resulting from increased
    biofuel production. We then use satellite data to determine not the
    amount of land that might be converted, but what types of land will be
    used in a particular country if additional land is needed for crop
    production as a result of U.S. biofuels expansion, based on land use
    change patterns determined from satellite imagery from 2001 to 2004.
        That being said, we recognize that this is an area of potential
    uncertainty. Therefore, the use of satellite data is one of the
    components of the lifecycle analysis that we are having peer-reviewed
    and have specifically asked for comment on throughout the rulemaking
    process. We also have sought input from our Agency partners, including
    USDA, on this issue.

        Question 8. The International Energy Agency report also challenged
    the biofuels industry to keep better track of its performance. Are you
    working with the biofuels industry on that front?
        Answer. EPA has an extensive history of working with the biofuels
    industry and other stakeholders. These interactions have helped us
    craft approaches in our regulations to help keep better track of
    performance. For example, our RFS2 proposal includes new registration
    and reporting requirements for biofuel producers which will help us to
    better quantify and track individual producers' performance and the
    industry's performance overall. The registration requirement will help
    us understand the feedstocks, processes, energy sources, and products
    that existing facilities are capable of utilizing or producing. In
    addition, we also are proposing that producers submit an annual
    production outlook report. This report will help us gauge the overall
    direction of the industry, including anticipated biofuel production
    volumes and facility expansions or other changes being planned or
    underway. This information will help us set the annual RFS standards
    for each of the four categories of renewable fuel, as well as feed into
    any future analyses of the industry as well as supporting our future
    lifecycle modeling efforts.
        Furthermore, EPA is currently undergoing a separate rulemaking that
    would require industrial sources that emit above a certain threshold of
    GHGs per year to report these emissions to EPA. Biofuel production
    facilities that meet or exceed the threshold would be required to
    report their emissions, providing EPA with additional, facility-
    specific data that will help us track the industry's performance.

        Question 9. In your testimony you discussed the statutory emission
    reduction thresholds for each of the four different renewable fuel
    categories. Also in statute are explicit provisions that give the
    authority for EPA to reduce the emission reduction thresholds. Under
    what circumstances would you consider using this authority?
        Answer. EISA stipulates the conditions under which EPA may make an
    adjustment to the GHG emission reduction thresholds. All such
    adjustments must be the ``minimum possible adjustment'' and result in
    the ``maximum achievable level'' of GHG reduction, taking cost into
    consideration. There are additional criteria for the fuel-specific
    thresholds. For the 20 percent threshold applicable to all renewable
    fuel, the adjusted level must be that achievable by ``natural gas fired
    corn-based ethanol plants, allowing for the use of a variety of
    technologies and processes.'' For the 50 percent thresholds applicable
    to advanced biofuel and biomass-based diesel, and the 60 percent
    threshold applicable to cellulosic biofuel, an adjustment must allow
    for the ``use a variety of feedstocks, technologies, and processes.''
    Finally, adjusted thresholds can be no lower than ten percent below the
    thresholds specified in EISA.
        In our Notice of Proposed Rulemaking for the RFS2 program, we have
    proposed that the GHG threshold for advanced biofuel be lowered to 44
    percent, or potentially as low as 40 percent. This proposal is based on
    our projection that imported sugarcane ethanol is the only renewable
    fuel available in sufficient volumes over the next several years to
    allow the statutory volume requirements for advanced biofuel to be met.
    Based on the preliminary lifecycle analysis conducted for the proposal,
    sugarcane ethanol would achieve a 44 percent reduction in GHGs. The
    final adjustment would depend upon the updated lifecycle analyses
    conducted for the final rule.
        Similarly, due to the projected insufficiency of waste grease
    feedstocks that could be used to produce biodiesel or renewable diesel
    meeting the 50 percent GHG threshold for biomass-based diesel, we take
    comments on reducing this threshold to 40 percent in combination with
    an allowance for biodiesel producers to average the GHG reduction
    profile of their soy oil and waste fats and greases feedstocks. These
    adjustments would allow biodiesel producers to utilize sufficient
    volumes of feedstocks to meet or exceed the 1.0 billion gallon volume
    mandate established by EISA for biomass-based diesel in 2012.

        Question 10. In your written testimony you said that the EPA has
    developed a ``robust and scientifically supported methodology that
    identifies direct AND indirect emissions, including those resulting
    from international land use changes.'' When you say you have developed
    a scientifically supported methodology, are you including the 125
    scientists who submitted a letter to the California Air Resources Board
    during the public comment period who wrote that the science for
    indirect emissions from land use changes is NOT ready for
    implementation in the California Low Carbon Fuel Standard?
        Answer. EPA has consulted with dozens of noted experts in
    developing our lifecycle assessment for biofuels including those from
    industry, academic researchers and experts from USDA and DOE. These
    experts have presented a range of viewpoints and information that
    enabled the Agency to prepare a technically and scientifically sound
    analysis of the full lifecycle GHG emission impacts of biofuels, using
    well-accepted, peer-reviewed models. We also anticipate that the
    feedback we receive through the lifecycle workshop and peer review will
    further improve our analysis.
        We also have coordinated with California's Air Resources Board. We
    note that California's Air Resources Board received numerous comments,
    including those from a large number of scientists who supported their
    proposed assessment of both direct and indirect land use impacts. After
    considering all comments received, the Board voted almost unanimously
    to adopt the rules which included land use impacts.

        Question 11. Given the uncertainty of the science and lack of
    confidence for methodologies surrounding indirect emissions from land
    use changes how do you think the decisions to use indirect land use
    changes as part of the RFS proposed rule is reconciled with the March
    9, 2009 the White House memo calling for ``science and the scientific
    process must inform and guide decisions'' for the Administration?
        Answer. EPA's work is using science and the scientific process to
    inform and guide decisions. For example, dozens of scientists and EPA
    experts have established that indirect emissions comprise a significant
    portion of the total lifecycle emissions of biofuels. In creating our
    lifecycle methodology we turned to use of well-established models,
    tools, and data. We also recognize that lifecycle analysis is a new
    part of the RFS program and that much of our methodology represents
    groundbreaking science. Therefore we have proceeded in a manner
    consistent with the President's call to guide decisions on science in a
    transparent process. EPA's proposal describes in depth the lifecycle
    analysis methodology and highlights the assumptions and model inputs
    that particularly influence our assessment. We have conducted a
    sensitivity analyses on key parameters and demonstrate how our
    assessments might change under alternative assumptions. Additionally,
    EPA is conducting formal peer reviews of several key components of the
    lifecycle methodology. Lastly, the Administrator recently extended the
    comment period on the proposed rule by 60 days in order to provide
    additional time for review of EPA's work.

        Question 12. Please describe in detail the work you have done to
    develop methodologies to measure the indirect emissions from
    conventional fuels in general? Specifically, what work have you done in
    this area regarding the production of gas and oil from tar sands and
    oil shale?
        Answer. Based on the EISA requirements, we compare the lifecycle
    emissions of biofuels to the average 2005 emissions of producing either
    petroleum gasoline or diesel fuel depending on what fuel the biofuels
    replace. We use the same lifecycle boundaries for biofuels and
    petroleum-based fuels when addressing both domestic and international
    greenhouse gas impacts, including extraction emissions from crude oil.
    In 2005, five percent of crude was Canadian tar sand, one percent was
    Venezuela extra heavy, and 23 percent was heavy crude.
        The direct emission factors for Canadian tar sand production were
    based on the GREET model Version 1.8b, and emission factors for other
    non-conventional sources of heavy crude were based on analysis done by
    EPA for the proposed rulemaking. We plan to update these factors for
    our final rulemaking analysis with, for example, work done by the U.S.
    Department of Energy's National Energy Technology Laboratory (NETL)
    that estimates the average lifecycle GHG emissions from petroleum-based
    fuels sold or distributed in 2005.
        With regard to analyzing the direct and indirect emission impacts
    of petroleum fuel production, our work to date has found that the
    indirect land use change emissions are insignificant because, unlike
    biofuels, there is not the same opportunity cost of land. This is
    because the land needed for petroleum extraction is not replacing land
    that would otherwise be used to provide resources for an existing
    market (i.e., crop based biofuels displacing crops used for feed).
    However, for the final rule we are evaluating other indirect impacts
    associated with petroleum fuel production, such as petroleum product
    supply and demand changes associated with a marginal change in
    transportation fuel use. This will need to be evaluated in the context
    of the Act requirements of using a 2005 average baseline for petroleum
    fuels.
        In the proposed rule we are seeking comment on EPA's work on this
    topic and on the best approach for analyzing each aspect of the
    petroleum lifecycle.

        Question 13. In your testimony you stated that the burden for
    ensuring feedstock eligiblity for the RFS program will rest on the
    biofuel producer. What is the expected cost of compliance for a biofuel
    producer? Does this rule expose biofuel producers to citizen or
    environmental lawsuits if non-eligible feedstocks are used? Under any
    enforcement mechanism, do you expect the EPA to go onto a farm to
    verify land or feedstock eligibility for the RFS?
        Answer. In the analysis that accompanies the RFS2 proposal, we have
    estimated the cost of compliance for renewable fuel producers to be
    roughly $2,000 annually per producer; however, we realize that this sum
    may actually be higher or lower depending on a producer's business
    practices. We are seeking comment from industry on this estimate for
    the final rule. We do not believe that our proposal exposes biofuel
    producers to lawsuits to a higher degree than their current exposure
    under the existing RFS program.
        As for whether or not EPA would have to visit a farm to verify
    feedstock production, our main proposal would not envision having EPA
    visit farms. The proposal seeks comment on a variety of alternatives
    that could help inform our enforcement efforts while limiting any
    visits to or audits of feedstock producers' records, including using
    aerial photography or satellite imagery to identify general land use
    trends. We also investigated several options besides our proposed
    option, including use of data already collected by USDA to help us
    ensure compliance with the renewable biomass provision. However, due to
    USDA policy and new data-sharing restrictions contained in the 2008
    Farm Bill, this option does not appear to be available to us. We are
    continuing to work with USDA on this issue.

        Question 14. Have you made available the specifics of your modeling
    on land use changes? So that people can see what your assumptions were.
        Answer. Yes. All of the information supporting EPA's analysis is
    now available in the public docket for the rule. This information
    includes a full description of each of the models we used, all of our
    assumptions, and all of the empirical data used (e.g., input and output
    files). In addition to this availability, during the development of our
    assessment, we shared our plans and assumptions with USDA and other
    Federal agencies and with a wide variety of stakeholders including
    those from the biofuel industry as well as the agricultural industry.
    Important assumptions such as growth in crop yields were coordinated
    prior to our finalizing our assessments to make sure we benefited from
    full industry input. Then, after completing our analyses, we shared the
    results again with our Federal partners, the affected industry members
    and other experts as part of our open rulemaking process, all before
    processing the rule for public release.

        Question 15. EPA says their modeling shows that ethanol reduces
    greenhouse gases by 16% compared to gasoline, however that is after you
    penalize corn based ethanol by 40% for the indirect international land
    use. This is a significant reduction. Will you provide the modeling
    that you have used to determine this reduction to the public and to
    this Committee? Knowing full well that farmers in Brazil and other
    countries base a number of factors, exports, weather, local needs, have
    been changing their practices for decades--how did you arrive at this
    penalty based on one use--corn ethanol?
        Answer. We have made all of our modeling (including all of the
    assumptions and key variables) available to the public. EPA has both
    shared this information with our stakeholders via numerous meetings and
    presentations and provided it in the public docket.
        In determining indirect impacts, the methodology we have developed
    isolates the impacts of biofuels production, which allows us to
    differentiate and assign just the land use change directly caused by
    increases in renewable fuels. This approach considers the impacts of
    increased biofuels production versus a baseline that incorporates the
    number of other factors you mention. Therefore the only change we
    measure is from biofuels production, keeping all other factors
    constant. As noted above, this approach is described in detail in the
    proposed rule.

        Question 16. Yesterday's Presidential Directive directed EPA to
    solicit peer reviewed, scientific data on the indirect land use
    component, and this is the issue that all the media seems to have
    focused on--yet, your testimony seems to gloss over it. Do you not
    think it is important?
        Answer. As I described in my oral and written testimony, EPA
    considers peer review a critical component of our lifecycle methodology
    and the scientific process. This is why we made conducting these
    reviews during the public comment period a top priority. The reviews
    are focused on four areas of our lifecycle assessment that in
    particular charted new ground: use of satellite data to project future
    the type of land use changes; land conversion GHG emissions factors
    estimates used for different types of land use; estimates of GHG
    emissions from foreign crop production; methods to account for the
    variable timing of GHG emissions; and how the models are used together
    to provide overall lifecycle GHG estimates. The reviews are being
    conducted following OMB's peer review guidance that ensures consistent
    government-wide implementation of peer review and according to EPA's
    longstanding and rigorous peer review policies.

        Question 17. Can you describe to me the process whereby EPA
    determined how it would measure indirect effects associated with
    biofuel production? What is the scientific basis? What data does the
    EPA possess that demonstrates indirect effects associated with biofuels
    production?
        Answer. Measuring the indirect effects of biofuels is based on the
    fact that in any given year, the use of biofuel production requires
    land that would have been used for other uses absent use for biofuels.
    Therefore, there is an opportunity cost associated with using
    feedstocks or land for biofuels that would have otherwise been used for
    an alternate use absent the biofuel production. EPA has relied on peer-
    reviewed agricultural sector models to conduct this work. These models
    are used (and have been used historically) to predict how the market
    will respond to these type of changes. This work has established that
    indirect emissions comprise a significant portion of the total
    lifecycle emissions of biofuels.
        In developing a lifecycle methodology that incorporated indirect
    effects we focused on maximizing transparency and utilizing the many
    noted experts in this field, including those from industry, academic
    researchers and other Federal agencies. For example, we met regularly
    with the USDA and turned to their experts for key data points (e.g.,
    crop yield assumptions). The range of viewpoints and information we
    have received through this process has enabled the Agency to prepare a
    technically sound and scientifically robust analysis of the full
    lifecycle GHG emission impacts of biofuels. We then built on this
    process by holding a 2 day public workshop on the lifecycle methodology
    and conducting a formal, scientific peer review of key elements of the
    methodology.

        Question 18. Will the EPA make all of its analysis and the models
    it used to determine indirect land change available to the public? If
    so when? If not, why not?
        Answer. All models, data, spreadsheet calculations, and results
    input and generated in the lifecycle analysis are publicly available.
    Please see the NPRM docket at www.epa.gov/otaq/renewablefuels/
    index.htm. In addition, EPA recently held a 2 day public workshop on
    our lifecycle analysis during which each major element of the
    methodology was presented and discussed.

        Question 19. It is clear that there is no scientific consensus that
    indirect land use change is the result of increased biofuels production
    (cite the 111 Ph.D. letter among others). Indirect land use is not a
    parameter for Life Cycle Analysis as set forth by the International
    Standards Organization in ISO 14040 and 14044. The EU decided to
    postpone the inclusion of indirect effects in its assessment of GHG
    emissions. The State of California recognizes that there are problems
    with quantification of indirect effects as part of their low carbon
    fuel standard and decided to study this theory over the next 20
    months--why does the EPA persist in including indirect land use change
    in its analysis?
        Answer. EISA mandates that significant indirect effects such as
    land use change be incorporated into the RFS lifecycle assessment. The
    International Organization for Standardization (ISO) sets out
    guidelines for development of lifecycle analysis and advises that
    lifecycle boundaries should include all components with significant
    effects on the environmental impact (i.e., greenhouse gas emissions)
    and expanded to take into account additional functions related to co-
    products. EPA follows this guidance by incorporating indirect land use
    change into the lifecycle analysis in a manner that appropriately takes
    into account co-products.
        The State of California and the many independent studies on this
    topic have reached the same conclusion regarding indirect land use--and
    that is that indirect land use change in response to biofuel production
    can significantly impact associated lifecycle GHG emissions and
    therefore it must be considered. In fact, we understand that California
    has finalized their rulemaking including indirect land use change. EPA
    continues to communicate closely with the California Air Resources
    Board and with the European Commission and EU countries in regards to
    our respective work on greenhouse lifecycle assessment for biofuels and
    on land use change.
        EPA recognizes there is uncertainty in these analyses, which is why
    we are pursuing formal peer reviews of key components of the
    methodology, soliciting comments before finalizing the rule, and
    incorporating a process that recognizes that the science in this area
    will continue to evolve even after a final rule.

        Question 20. Indirect land use has deeply divided the scientific
    community and consensus does not exist. Before indirect effects apply
    to one sector of the U.S. economy and the only sector currently
    displacing foreign oil this needs to get figured out, and only then,
    should it be applied at all. It certainly cannot be applied to only
    biofuels. Please describe for this Committee--in detail and timeline--
    your thoughts on ``indirect land use effects'' from tar sands, coal,
    and foreign oil?
        Answer. Our work to date has found that petroleum fuel production
    does not have the same indirect land use change emissions associated
    with biofuels because, unlike biofuels, there is not the same
    opportunity cost of land needed for petroleum extraction in the sense
    it is not replacing land that would otherwise be used to provide
    resources for an existing market (i.e., crop based biofuels displacing
    crops used for feed). There is potentially direct land use change
    emissions associated with extraction but these are estimated to be
    insignificant due to the relatively small amount of land required and
    the large amount of energy produced over the life of a crude oil well.
        For the final rule, we are also evaluating other indirect impacts
    associated with petroleum fuel production, such as petroleum product
    supply and demand changes associated with a marginal change in
    transportation fuel use. This will need to be evaluated in the context
    of the Act requirements of using a 2005 average baseline for petroleum
    fuels. EPA also is continuing to evaluate direct emission estimates for
    the final rule, including, for example, land needed in the surface
    mining of tar sands.

        Question 21. From a scientific and economic standpoint--does the
    disparity in application of this theory--bother the agency responsible
    for regulation?
        Answer. EPA's responsibility is to follow the law and, on this
    point, the law is clear. We are required to assess renewable fuel
    lifecycle greenhouse gas emissions, including direct emissions and
    significant indirect emissions, such as significant emissions from land
    use change. We are required to use a 2005 average petroleum baseline
    fuel. From a scientific standpoint, we use the same lifecycle
    boundaries for biofuels and petroleum-based fuels when addressing both
    domestic and international greenhouse gas impacts, in that we are
    including international extraction emissions from crude oil.
        As mentioned above, for the final rule, we are also evaluating
    indirect impacts associated with petroleum fuel production, such as
    petroleum product supply and demand changes associated with a marginal
    change in transportation fuel use. This will need to be evaluated in
    the context of the Act requirements of using a 2005 average baseline
    for petroleum fuels.

        Question 22. During the week of April 22, 2009--a study looking at
    one indirect effect from petroleum was published in the academic
    journal Biofuels, Bioproducts and Biorefining. The authors from the
    University of Nebraska found that the indirect emissions from
    safeguarding oil supplies in the Middle East double the carbon
    intensity of our gasoline imports from that part of world. Have you
    given any thought to the indirect emissions of foreign oil due to
    overseas military operations and expenditures? Have you seen the study?
    Has EPA considered this?
        Answer. We are aware of this particular report and have studied and
    considered how to measure the indirect emissions of foreign oil due to
    overseas military operations. EPA has explored this issue in a peer
    reviewed study of the energy security benefits of reducing U.S. oil
    imports. The review concluded that attribution of military costs to
    particular missions or activities is difficult. So while there may be a
    link between military expenditures and petroleum production, there is
    no methodology for allocating a portion of military expenditures to oil
    production and specifically an incremental change in oil imports. The
    same would be true from a lifecycle GHG emission context in that there
    is no methodology for allocating these emissions to petroleum
    production. However, this is an area we are continuing to study and one
    we specifically seek comment on in the proposed rule. In particular, we
    have asked for comment on how we can estimate the emissions associated
    with maintaining a U.S. military presence to help secure stable oil
    supply from potentially vulnerable regions of the world given the
    difficulty of attributing these emissions to particular missions or
    activities. Another consideration is that we must apply the same
    lifecycle boundaries for biofuels and petroleum-based fuels when
    addressing both domestic and international greenhouse gas impacts and
    therefore should also then consider emissions from military
    expenditures to protect domestic agriculture interests.

        Question 23. Did EPA work with other Federal agencies and CARB on
    your modeling? Did CARB use a different set of models than EPA? If so,
    why? Did you find fault with the CARB modeling?
        Answer. EPA worked very closely with other Federal agencies, in
    particular the Departments of Agriculture and Energy. Early in the
    process, we coordinated our analytical plan, receiving their
    concurrence. This was followed by numerous consultations and briefings
    along the way. We relied heavily on the technical inputs of USDA and
    DOE as we developed the best assumptions to use and then modeled the
    impacts of the rule. We similarly coordinated with CARB, sharing
    assumptions, results, and methods. Both EPA and CARB agreed that
    important assumptions used in running these models should be consistent
    and we worked closely to assure that was the case. We continue to work
    with CARB to improve the lifecycle GHG assessment of biofuels. In
    addition, we discuss and ask for comment in the NPRM on the approach
    that CARB has taken in their program.

        Question 24. I order to meet the requirements of the RFS2 for corn
    ethanol it is 15 billion gallons by 2022--I assume that if no new
    virgin acres came into production to meet that requirement, then by
    definition your ILUC number for corn ethanol would be zero, correct? If
    yes, then the reduction of GHG for corn ethanol should be 60%, not the
    16% in the rule? Can you please clarify?
        Answer. No, that is not correct. Our methodology compares land use
    changes occurring under two scenarios--one with the RFS volume mandates
    in place and one without. So we are considering for a given year, the
    opportunity cost of using feedstocks and land for biofuels production
    as opposed to what the land would be used for absent biofuels
    production. Therefore, even if corn ethanol production increased from
    current levels to 15 Bgal in 2022 without any observable land use
    change in the U.S., there would still be an indirect land use change
    associated with the corn ethanol production in 2022. What we are
    comparing is how much land would be required to meet worldwide demand
    for food and feed in 2022 assuming the RFS2 in place versus no RFS2. So
    even if yields are increasing to help meet increasing demand over time,
    the increased demand for land associated will biofuels will have an
    indirect impact from what would have happened otherwise.
    Questions Submitted By Hon. Stephanie Herseth Sandlin, a Representative
            in Congress from South Dakota
        Question 1. At the hearing on May 6, 2009, you testified in
    response to my questioning that the indirect emissions were broken out
    to show the difference between international and domestic sources. For
    corn ethanol, for example, EPA has provided a table (Table VI.C.1-1)
    which appears to outline various elements of the lifecycle analysis for
    a natural gas dry mill that dries its distiller grains (p. 315). Table
    VI.C.1-2 then provides two columns of EPA's estimate of reductions
    under two options for each of the corn ethanol pathways identified by
    EPA (p. 317). EPA does not explain how these tables reflect the fuel's
    lifecycle stage being considered as outlined in the remainder of the
    preamble or how Table VI.C.1-1 relates to the additional pathways in
    Table VI.C.1-2. I request that EPA provide the following information as
    requested in the tables listed below.
        For Table VI.C.1-1 (and similar tables for other fuels), identify
    the fuel lifecycle stage being addressed by the emissions, a list of
    source of emissions for that stage, and whether such emissions are
    direct or indirect, and identify the total net emissions without
    international land use change and with international land use change.
    Where there are no emissions references for the petroleum baseline,
    please provide an explanation as to why there are no such numbers:
        Answer.

     Modified Table VI.C.1-1--Absolute GHG Emissions for Corn Ethanol and the 2005 Petroleum Baseline (CO2-eq/mmBtu)
                                     With and Without International Land Use Changes
    ----------------------------------------------------------------------------------------------------------------
                               2005 Gasoline       Natural Gas Dry Mill      2005 Gasoline      Natural Gas Dry Mill
                                  Baseline             with dry DGs             Baseline            with dry DGs
    ----------------------------------------------------------------------------------------------------------------
       Lifecycle Stage                       100 yr 2%
                                             30 yr 0%
    ----------------------------------------------------------------------------------------------------------------
    Feedstock/Fuel         823,262                1,436,720              573,058                1,037,279
     Production
      --Direct Emissions   --Crude oil            --Agricultural inputs  Same as 100 yr 2%      Same as 100 yr 2%
       (list sources of     extraction             and emissions from
       emissions)          --Transport of crude    growing corn used in
                            oil to refinery        ethanol production
                           --Upstream and onsite  --Land use change to
                            energy use and         grow corn used in
                            emissions at           ethanol production
                            refinery to produce   --Upstream and onsite
                            gasoline               energy use at
                           --Distribution of       ethanol production
                            gasoline               plant
      --Indirect           --EISA requires that   --Agricultural inputs  Same as 100 yr 2%      Same as 100 yr 2%
       Emissions (list      lifecycle GHG          and emissions from
       sources of           emissions of           growing crops
       emissions,           renewable fuels be     indirectly impacted
       excluding            compared to a 2005     by use of corn for
       international land   average petroleum      ethanol production
       use changes)         baseline.              (domestically and
                             Determining           internationally)
                            indirect impacts      --Indirect domestic
                            would require EPA to   land use changes
                            estimate, for          including changes in
                            example, petroleum     soil management
                            displaced by           practices
                            renewable fuel. This  --Changes in
                            analysis seems         livestock production
                            inconsistent with
                            the statute's 2005
                            baseline
                            requirement.
                            However, the NPRM
                            seeks comment on
                            this.
    Fuel and Feedstock     Included in Feedstock/ 174,327                Included in Feedstock/ 121,346
     Distribution and       Fuel Production                               Fuel Production
     Delivery
    Use of Finished Fuel   3,417,411              37,927                 2,378,800              26,400
     (Tailpipe Emissions)
    Net Total Emissions    4,240,674              1,648,974              2,951,858              1,185,025
     (w/o indirect
     emissions from
     international land
     use changes)
    Indirect emissions     --EISA requires that   1,911,391              Same as 100 yr 2%      1,910,822
     from international     lifecycle GHG
     land use changes       emissions of
                            renewable fuels be
                            compared to a 2005
                            average petroleum
                            baseline.
                            Determining indirect
                            impacts would
                            require EPA to
                            estimate, for
                            example, petroleum
                            displaced by
                            renewable fuel. This
                            analysis seems
                            inconsistent with
                            the statute's 2005
                            baseline
                            requirement.
                            However, the NPRM
                            seeks comment on
                            this
    Net Total Emissions    4,240,674              3,560,365              2,951,858              3,095,846
    ----------------------------------------------------------------------------------------------------------------

        Question 2. For Table VI.C.1-2 (and similar tables for other
    fuels), identify the percent reductions without consideration of
    international land use changes, as follows:
        Answer.

           Modified Table VI.C.1-2--Lifecycle GHG Emissions Changes for Various Corn Ethanol Pathways in 2022 Relative to the 2005 Petroleum Baseline
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Percent Change from      Percent Change from      Percent Change from
                                                              2005  Petroleum          2005  Petroleum        2005 Baseline (30 yr     Percent Change from
             Corn Ethanol Production Plant Type             Baseline (100 yr 2%,     Baseline (100 yr 2%,         0%, without          2005 Baseline (30 yr
                                                           without international   with international land   international land use   0%, with international
                                                             land use changes)           use changes)               changes)            land use changes)
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Note: EPA's approach to lifecycle modeling considers all significant direct and indirect sources of emissions. It is invalid to present results that
     only omit emissions from international land use change. Lifecycle modeling accounts for land use change as well as other ``positive'' indirect impacts
     in terms of biofuels GHG emissions, such as reductions in livestock emissions and shifting of crop production to regions with lower GHG impacts. The
     lifecycle modeling and results are internally inconsistent when only one of the indirect impacts is omitted. The results without international land use
     change presented below are for illustrative purposes only.
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Natural Gas Dry Mill with dry DGs                                        ^61%                     ^16%                     ^60%                      +5%
    Natural Gas Dry Mill with dry DGs and CHP                                ^64%                     ^19%                     ^63%                      +2%
    Natural Gas Dry Mill with dry DGs, CHP, and Corn Oil                     ^72%                     ^27%                     ^71%                      ^6%
     Fractionation
    Natural Gas Dry Mill with dry DGs, CHP, Corn Oil                         ^76%                     ^30%                     ^74%                     ^10%
     Fractionation, and Membrane Separation
    Natural Gas Dry Mill with dry DGs, CHP, Corn Oil                         ^80%                     ^35%                     ^79%                     ^14%
     Fractionation, and Membrane Separation, and Raw
     Starch Hydrolysis
    Natural Gas Dry Mill with wet DGs                                        ^72%                     ^27%                     ^70%                      ^6%
    Natural Gas Dry Mill with wet DGs and CHP                                ^75%                     ^30%                     ^74%                      ^9%
    Natural Gas Dry Mill with wet DGs, CHP, and Corn Oil                     ^78%                     ^33%                     ^76%                     ^12%
     Fractionation
    Natural Gas Dry Mill with wet DGs, CHP, Corn Oil                         ^81%                     ^36%                     ^80%                     ^15%
     Fractionation, and Membrane Separation
    Natural Gas Dry Mill with wet DGs, CHP, Corn Oil                         ^84%                     ^39%                     ^83%                     ^18%
     Fractionation, and Membrane Separation, and Raw
     Starch Hydrolysis
    Coal Fired Dry Mill with dry DGs                                         ^32%                     +13%                     ^31%                     +34%
    Coal Fired Dry Mill with dry DGs and CHP                                 ^35%                     +10%                     ^33%                     +31%
    Coal Fired Dry Mill with dry DGs, CHP, and Corn Oil                      ^51%                      ^5%                     ^49%                     +15%
     Fractionation
    Coal Fired Dry Mill with dry DGs, CHP, Corn Oil                          ^58%                     ^13%                     ^57%                      +8%
     Fractionation, and Membrane Separation
    Coal Fired Dry Mill with dry DGs, CHP, Corn Oil                          ^67%                     ^21%                     ^65%                      ^1%
     Fractionation, and Membrane Separation, and Raw
     Starch Hydrolysis
    Coal Fired Dry Mill with wet DGs                                         ^54%                      ^9%                     ^53%                     +12%
    Coal Fired Dry Mill with wet DGs and CHP                                 ^56%                     ^11%                     ^55%                     +10%
    Coal Fired Dry Mill with wet DGs, CHP, and Corn Oil                      ^63%                     ^17%                     ^61%                      +3%
     Fractionation
    Coal Fired Dry Mill with wet DGs, CHP, Corn Oil                          ^70%                     ^25%                     ^69%                      ^4%
     Fractionation, and Membrane Separation
    Coal Fired Dry Mill with wet DGs, CHP, Corn Oil                          ^75%                     ^30%                     ^74%                      ^9%
     Fractionation, and Membrane Separation, and Raw
     Starch Hydrolysis
    Biomass Fired Dry Mill with dry DGs                                      ^84%                     ^39%                     ^83%                     ^18%
    Biomass Fired Dry Mill with wet DGs                                      ^85%                     ^40%                     ^84%                     ^19%
    Natural Gas Fired Wet Mill                                               ^52%                      ^7%                     ^51%                     +14%
    Coal Fired Wet Mill                                                      ^25%                     +20%                     ^24%                     +41%
    Biomass Fired Wet Mill                                                   ^92%                     ^47%                     ^91%                     ^26%
    --------------------------------------------------------------------------------------------------------------------------------------------------------

        Question 3. As requested above, please provide a similar analysis
    for Table VI.C.1-3 (Corn Ethanol Lifecycle GHG Emissions Changes in
    2012, 2017, and 2022).
        Answer.

                                  Modified Table VI.C.1-3--Corn Ethanol Lifecycle GHG Emissions Changes in 2012, 2017, and 2022
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Percent Change from                               Percent Change from
                                                            Percent Change from        2005  Petroleum        Percent Change from        2005  Petroleum
                    Scenario Description                      2005  Petroleum        Baseline (100 yr 2%,       2005  Petroleum        Baseline (30 yr 0%,
                                                            Baseline (100 yr 2%)    without international     Baseline (30 yr 0%)     without international
                                                                                      land use changes)                                 land use changes)
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Note: EPA's approach to lifecycle modeling considers all significant direct and indirect sources of emissions. It is invalid to present results that
     only omit emissions from international land use change. Lifecycle modeling accounts for land use change as well as other ``positive'' indirect impacts
     in terms of biofuels GHG emissions, such as reductions in livestock emissions and shifting of crop production to regions with lower GHG impacts. The
     lifecycle modeling and results are internally inconsistent when only one of the indirect impacts is omitted. The results without international land use
     change presented below are for illustrative purposes only.
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Corn Ethanol Natural Gas Dry Mill in 2012 with dry                       ^16%                     ^61%                      ^3%                     ^60%
     DGs
    Corn Ethanol Natural Gas Dry Mill in 2017 with dry                       ^13%                     ^61%                      +9%                     ^60%
     DGs
    Corn Ethanol Natural Gas Dry Mill in 2022 with dry                       ^16%                     ^61%                      +5%                     ^60%
     DGs
    --------------------------------------------------------------------------------------------------------------------------------------------------------

        Question 4. As requested above, please provide a similar analysis
    for Table VI.C.1-4 (Corn Ethanol Lifecycle GHG Emissions Changes
    Associated with Different Volume Changes).
        Answer.

                         Modified Table VI.C.1-4--Corn Ethanol Lifecycle GHG Emissions Changes Associated with Different Volume Changes
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Percent Change from                               Percent Change from
                                                            Percent Change from        2005  Petroleum        Percent Change from        2005  Petroleum
                    Scenario Description                      2005  Petroleum        Baseline (100 yr 2%,       2005  Petroleum        Baseline (30 yr 0%,
                                                            Baseline (100 yr 2%)    without international     Baseline (30 yr 0%)     without international
                                                                                      land use changes)                                 land use changes)
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Note: EPA's approach to lifecycle modeling considers all significant direct and indirect sources of emissions. It is invalid to present results that
     only omit emissions from international land use change. Lifecycle modeling accounts for land use change as well as other ``positive'' indirect impacts
     in terms of biofuels GHG emissions, such as reductions in livestock emissions and shifting of crop production to regions with lower GHG impacts. The
     lifecycle modeling and results are internally inconsistent when only one of the indirect impacts is omitted. The results without international land use
     change presented below are for illustrative purposes only.
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Corn Ethanol Natural Gas Dry Mill in 2022 with dry                       ^16%                     ^61%                      +5%                     ^60%
     DGs; 2.7 Bgal change in corn ethanol volumes
    Corn Ethanol Natural Gas Dry Mill in 2022 with dry                        ^6%                     ^52%                     +14%                     ^51%
     DGs; 6.3 Bgal change in corn ethanol volumes
    --------------------------------------------------------------------------------------------------------------------------------------------------------

        Question 5. How does EPA (or the models EPA used) determine what
    factor(s) cause specific land use change?
        Answer. The methodology EPA has developed isolates the impacts of
    biofuels production, which allows us to differentiate and assign just
    the land use change directly caused by increases in renewable fuels.
    This approach considers the impacts of increased biofuels production
    versus a baseline that incorporates the number of other factors you
    mention. Therefore the only change we measure is from biofuels
    production, keeping all other factors constant.
        To do this work, we combine a suite of peer-reviewed process models
    and peer-reviewed economic models of the domestic and international
    agricultural sectors to determine direct and significant indirect
    emissions, respectively. These agricultural sector models allow us to
    estimate the total additional cropland needed internationally and where
    (by country) expansion would occur for the specific factor of increased
    biofuels production. To determine what types of land are converted to
    meet this additional cropland demand, we use recent land use trends
    based on satellite data. These trends take into account a number of
    drivers, but for the purposes we are using them for (i.e., to determine
    what type of land is converted with increased cropland expansion) they
    apply for any driver of cropland expansion, including biofuels.
    Questions Relating to Biodiesel:
        Question 6. Is it correct that you took 2001to 2004 land conversion
    rates and extrapolated those into the future to come up with the
    calculation of land use change you expect?
        Answer. No, this is not the case. In our analysis, the causes of
    crop expansion are captured with economic modeling. We rely on well-
    established economic models to project the amount of crop expansion in
    each country resulting from increased biofuel production. We then use
    satellite data to determine not the amount of land that might be
    converted but what types of land will be used in a particular country
    if additional land is needed for crop production as a result of U.S.
    biofuels expansion.
        We recognize that this is an area of potential uncertainty.
    Therefore, the use of satellite data is one of the components of the
    lifecycle analysis that we are having peer-reviewed and have
    specifically asked for comment on throughout the rulemaking process.

        Question 7. If U.S. biodiesel production from 2001 to 2004 grew
    from 5 million gallons in 2001 to 25 million gallons in 2004, is it
    unreasonable to conclude that biodiesel was not a significant cause of
    land use change that occurred from 2001 to 2004? Why or why not?
        Answer. No, this is not a correct conclusion. Our methodology
    compares land use changes occurring under two scenarios--one with the
    RFS volume mandates in place and one without. We are not comparing
    changes in emissions or land use over time but comparing the
    opportunity cost of using a feedstock or land for biofuel production in
    a given year. So a more appropriate comparison is what land use would
    have been in 2004 without the increase in biodiesel production.
    Questions Submitted By Hon. Deborah L. Halvorson, a Representative in
            Congress from Illinois
        Question 1. As you know, in the 2007 energy bill EPA was tasked
    with determining the lifecycle greenhouse gas emissions of current and
    future transportation fuels as part of the new renewable fuels
    standards. EPA has released published for comment a proposed rulemaking
    on this issue, but has had difficulty in finding consensus on the
    methodology, especially with respect to the issue of emissions from
    indirect land use change.
        My understanding is that the issue of greenhouse gas emissions from
    indirect land use change is a highly controversial one in the
    scientific community, and that there is still a very limited
    understanding of how biofuels production--or petroleum production and
    other economic activities, for that matter--impact land use change
    around the world. What will EPA do to resolve this uncertainty, and how
    will it implement the renewable fuels standards in a timely fashion
    while continuing to develop a greater understanding of this complex
    problem?
        Answer. As mandated by EISA, EPA's greenhouse gas emission
    assessments must evaluate the full lifecycle emission impacts of fuel
    production including both direct and indirect emissions, including
    significant emissions from land use changes. There is no question that
    this task was a challenge and required groundbreaking work. This is why
    we have taken every opportunity to test our assumptions, minimize
    uncertainties and maximize transparency.

        Question 1a. Will EPA re-examine the indirect land use issue in
    light of new research showing that initial estimates may have been
    overstated?
        Answer. EPA has spent the last year and half developing a
    technically and scientifically sound analysis of the full lifecycle GHG
    emission impacts of biofuels that incorporates indirect land use
    changes, using well-accepted, peer-reviewed models. This process has
    included reviewing the research in this field and, in many cases,
    consulting with the authors of this research. Through this effort, EPA
    has determined that indirect emissions comprise a significant portion
    of the total lifecycle emissions of biofuels. Many studies in the peer-
    reviewed literature also show that indirect land use emissions comprise
    a significant portion of the total lifecycle emissions of some biofuel
    pathways.
        We also recognize the significance of using lifecycle greenhouse
    gas emission assessments that include indirect impacts such as emission
    impacts of indirect land use changes and acknowledge the varying
    degrees of uncertainty in the different aspects of our analysis. As
    described above, we have taken a number of steps to address this
    uncertainty. However, EPA recognizes that the science in this area will
    continue to evolve even after a final rule. Thus, we are committed to
    revising and updating our analysis on an ongoing basis as new data and
    information comes available.
        Question 2. The issue of lifecycle analysis for biofuels is just
    one example of why scientists are critical to the mission at EPA. What
    will you do to ensure that scientists play a bigger role at EPA?
        Answer. EPA is committed to using scientific expertise housed both
    within and outside the Agency. EPA's scientists, other Federal
    scientists (e.g., USDA, DOE) and scientists at U.S. universities have
    and will continue to directly contribute to the development of the data
    and models for the lifecycle analysis. In addition, EPA is conducting
    formal peer review processes for several key components of the
    lifecycle analysis. During this process, external scientists will
    extend their expertise to provide third-party feedback on EPA's
    methodologies. EPA will continue to use research and knowledge
    developed by the nation and the world's scientific community as we
    proceed in refining the lifecycle analysis proposed in the NPRM.
        Throughout this work, EPA has remained committed to fostering sound
    science, consistent with the President's March 9, 2009 memorandum on
    scientific integrity. Our analyses are based upon the best science
    available, with every step of the process building upon our extensive
    collaboration with both Federal and independent scientific experts.

        Question 3. We are supposed to have 500 million gallons of
    biodiesel in 2009. My district lost a biodiesel plant this year. How is
    EPA insuring 500 million gallons are used this year?
        Answer. Although the RFS2 program will not be in place in 2009,
    after coordinating with our stakeholders, we are proposing a means of
    still implementing the statutory requirement for 500 million gallons of
    biomass-based diesel for 2009. While the RFS1 regulations do not
    provide a mechanism for putting this requirement in place in 2009, in
    our Notice of Proposed Rulemaking we are proposing that the 2009
    requirement of 500 million gallons and the 2010 requirement of 650
    million gallons be added together, with the total volume of 1.15
    billion gallons applicable in 2010 under RFS2. Obligated parties could
    then use credits (RINs) from both 2009 and 2010 to comply, and would
    have a strong incentive to blend biodiesel in 2009 in addition to 2010.