[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


           THE RENEWABLE FUEL STANDARD: IMPLEMENTATION ISSUES

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

                                 HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 22, 2016

                               __________

                           Serial No. 114-155
                           
                           
                           
                           
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                   COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Chairman Emeritus                    Ranking Member
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania        ELIOT L. ENGEL, New York
GREG WALDEN, Oregon                  GENE GREEN, Texas
TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
  Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington   KATHY CASTOR, Florida
GREGG HARPER, Mississippi            JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey            JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
PETE OLSON, Texas                    BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
MIKE POMPEO, Kansas                  JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois             YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia         DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
BILL JOHNSON, Ohio                   JOSEPH P. KENNEDY, III, 
BILLY LONG, Missouri                     Massachusetts
RENEE L. ELLMERS, North Carolina     TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota
                    Subcommittee on Energy and Power

                         ED WHITFIELD, Kentucky
                                 Chairman
PETE OLSON, Texas                    BOBBY L. RUSH, Illinois
  Vice Chairman                        Ranking Member
JOHN SHIMKUS, Illinois               JERRY McNERNEY, California
JOSEPH R. PITTS, Pennsylvania        PAUL TONKO, New York
ROBERT E. LATTA, Ohio                ELIOT L. ENGEL, New York
GREGG HARPER, Vice Chairman          GENE GREEN, Texas
DAVID B. McKINLEY, West Virginia     LOIS CAPPS, California
MIKE POMPEO, Kansas                  MICHAEL F. DOYLE, Pennsylvania
ADAM KINZINGER, Illinois             KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia         JOHN P. SARBANES, Maryland
BILL JOHNSON, Ohio                   PETER WELCH, Vermont
BILLY LONG, Missouri                 JOHN A. YARMUTH, Kentucky
RENEE L. ELLMERS, North Carolina     DAVID LOEBSACK, Iowa
BILL FLORES, Texas                   FRANK PALLONE, Jr., New Jersey (ex 
MARKWAYNE MULLIN, Oklahoma               officio)
RICHARD HUDSON, North Carolina
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     1
    Prepared statement...........................................     2
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................     3
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     6
    Prepared statement...........................................     7
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................   175

                               Witnesses

Janet McCabe, Acting Administrator, U.S. Environmental Protection 
  Agency.........................................................     9
    Prepared statement...........................................    12
    Answers to submitted questions...............................   224
Howard Gruenspecht, Deputy Administrator, U.S. Energy Information 
  Administration.................................................    15
    Prepared statement...........................................    17
Chet Thompson, President, American Fuel and Petrochemical 
  Manufacturers..................................................    51
    Prepared statement...........................................    54
Bob Dinneen, President and CEO, Renewable Fuels Association......    78
    Prepared statement...........................................    80
Todd J. Teske, Chairman, President, and CEO, Briggs & Stratton 
  Corporation....................................................    90
    Prepared statement...........................................    93
Brooke Coleman, Executive Director, Advanced Biofuels Business 
  Council........................................................   101
    Prepared statement...........................................   103
Collin O'Mara, President and CEO, National Wildlife Federation...   129
    Prepared statement...........................................   132
Anne Steckel, Vice President of Federal Affairs, National 
  Biodiesel Board................................................   146
    Prepared statement...........................................   148
Tim Columbus, General Counsel, National Association of 
  Convenience Stores and Society of Independent Gasoline 
  Marketers of America...........................................   152
    Prepared statement...........................................   154

                           Submitted Material

Statement of the Biotechnology Innovation Organization, submitted 
  by Mr. Kinzinger...............................................   177
Letter of June 21, 2016, from Commander Kirk S. Lippold, USN 
  (Ret.) to Mr. Olson, submitted by Mr. Kinzinger................   188
Statement of the Advanced Biolfuels Association, submitted by Mr. 
  Whitfield......................................................   190
Statement of Growth Energy, submitted by Mr. Whitfield...........   196
Statement of the National Farmers Union, submitted by Mr. 
  Whitfield......................................................   199
Statement of the National Council of Chain Restaurants, submitted 
  by Mr. Whitfield...............................................   202
Statement of the Coalition for Renewable Natural Gas, submitted 
  by Mr. Whitfield...............................................   211
Prepared statement of Hon. Steve King............................   219
Report from the Biotechnology Innovation Organization, submitted 
  by Mr. Rush....................................................   221

 
           THE RENEWABLE FUEL STANDARD: IMPLEMENTATION ISSUES

                              ----------                              


                        WEDNESDAY, JUNE 22, 2016

                  House of Representatives,
                  Subcommittee on Energy and Power,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:02 a.m., in 
room 2123 Rayburn House Office Building, Hon. Ed Whitfield 
(chairman of the subcommittee) presiding.
    Members present: Representatives Whitfield, Olson, Barton, 
Shimkus, Pitts, Latta, Harper, McKinley, Pompeo, Kinzinger, 
Griffith, Johnson, Long, Flores, Mullin, Hudson, Rush, Tonko, 
Welch, Loebsack, and Pallone (ex officio).
    Also present: Representative King.
    Staff present: Will Batson, Legislative Clerk, Energy and 
Power, Environment and the Economy; Allison Busbee, Policy 
Coordinator, Energy and Power; Rebecca Card, Assistant Press 
Secretary; Tom Hassenboehler, Chief Counsel, Energy and Power; 
A.T. Johnston, Senior Policy Advisor; Ben Lieberman, Counsel, 
Energy and Power; Brandon Mooney, Professional Staff Member, 
Energy and Power; Annelise Rickert, Legislative Associate; 
Chris Sarley, Policy Coordinator, Environment and the Economy; 
Dan Schneider, Press Secretary; Jean Fruci, Minority Energy and 
Environment Policy Advisor; Caitlin Haberman, Minority 
Professional Staff Member; John Marshall, Minority Policy 
Coordinator; Jessica Martinez, Minority Outreach and Member 
Services Coordinator; Dan Miller, Minority Staff Assistant; and 
Alexander Ratner, Minority Policy Analyst.

  OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

    Mr. Whitfield. I would like to call the hearing to order 
this morning, and I would like to recognize myself for a 5-
minute opening statement.
    This morning we are going to revisit the Renewable Fuel 
Standard, the EPA program to add agriculturally based fuels 
like ethanol and biodiesel to the nation's transportation fuel 
supply. It has been nearly a decade since the RFS was last 
revised by Congress in 2007 and a great deal has changed in the 
interim. Energy markets have evolved in ways that were not 
predicted back then, and RFS implementation has taken many 
unexpected turns.
    For these reasons we are conducting this hearing to assess 
the status of the RFS and I welcome both the government and 
stakeholder witnesses who will provide us with many 
perspectives on this multifaceted issue. And we will have two 
panels of witnesses this morning representing all sides of the 
issue, and I really look forward to the hearing.
    [The prepared statement of Mr. Whitfield follows:]

                Prepared statement of Hon. Ed Whitfield

    This morning we will revisit the Renewable Fuel Standard, 
the EPA program to add agriculturally-based fuels like ethanol 
and biodiesel to the nation's transportation fuel supply. It 
has been nearly a decade since the RFS was last revised by 
Congress in 2007, and a great deal has changed in the interim. 
Energy markets have evolved in ways that were not predicted 
back then, and RFS implementation has taken many unexpected 
turns. For these reasons, we are conducting this hearing to 
assess the status of the RFS, and I welcome both the government 
and stakeholder witnesses who will provide us with many 
perspectives on this multi-faceted issue.
    As I see it, the RFS was enacted largely for three 
reasons--to reduce America's dependence on foreign oil, to 
lower greenhouse gas emissions, and to strengthen rural 
economies. Over the span that the RFS has been in place, oil 
imports have indeed declined dramatically. However, most of 
this trend is due to sharply increased domestic oil 
production--something that few imagined was even possible 
during the Congressional debates over the RFS. Little of the 
decline in import dependence can be attributable to the RFS 
itself.
    The RFS was also supposed to provide a means for 
significantly reducing greenhouse gas emissions, but a growing 
number of scientists and environmental advocates are saying 
otherwise. Reports from the National Academy of Sciences, the 
Intergovernmental Panel on Climate Change, the Congressional 
Budget Office, and others have all hedged on whether renewable 
fuels are delivering the promised greenhouse gas reductions. 
And today, we will learn more about research showing that the 
RFS may be resulting in the destruction of carbon-storing 
natural lands that are being converted into cropland. In fact, 
EPA's Inspector General is currently investigating whether the 
agency has been ignoring these and other scientific 
developments that raise questions about the impact of the RFS 
on emissions.
    The third goal of the RFS is to boost rural economies, and 
here we can say that the program has delivered on its promise. 
The RFS has strengthened the demand for and price of corn, 
soybeans, and other feedstocks. And the bio-refineries that 
turn these materials into renewable fuels are primarily located 
in small farming communities where they provide a substantial 
number of jobs. I might add that many in the animal agriculture 
sector believe that the RFS raises the price of feed, so the 
benefits are far from universal, but overall the program 
remains popular in rural Kentucky and most of rural America.
    I believe we should have an open mind on whether changes 
are needed. Perhaps we can improve upon the benefits of this 
program while minimizing the downside.
    I am particularly concerned about the impact of the RFS on 
consumers. Billions of gallons of ethanol are being added to 
the fuel supply and we need to be certain that these renewable 
fuel-containing blends work well for the owners of the millions 
of cars, trucks, motorcycles, boats, and small engine equipment 
who use them. That is why I am particularly pleased that we are 
being joined by Mr. Todd Teske, the CEO of Briggs & Stratton, 
who can expand on the impacts of the RFS on outdoor power 
equipment.
    In addition, I am concerned about the program's long-term 
future, especially given that after the year 2022, the EPA will 
have a great deal of latitude in redesigning the program as the 
agency wishes. For these and other reasons, I welcome this 
important and necessary discussion of the RFS.

    Mr. Whitfield. At this time, I would like to yield the 
balance of my time to the gentleman from Illinois, Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman. First, I want to 
apologize. As Assistant Administrator McCabe knows, I am 
probably headed down to the White House for a bill signing so I 
am going to miss some of the--well-timed maybe, but I am going 
to miss some of the testimony and the questions.
    But just to weave the story, it was in 1992 where the 
auction and debate came into the fuel market, Clean Air Act of 
'92. I am reminded when I see my friend Kenny Hulshof in the 
background it was in 1998 when I really passed my first bill 
that changed EPAC on biodiesel to get real credits for fleets 
for fuel use, and that was just Karen McCarthy from Kansas 
City, Missouri, have a long part in this debate. In 2005, under 
the leadership of Chairman Barton we changed the debate again. 
We changed it from the clean air portions to energy security 
and that is what brought 2005 into the market. Then under the 
leadership of Chairman Waxman under Democrat controls we 
expanded the RFS and really started pushing next generation 
cellulosic issues.
    And we kind of find ourselves, this is kind of where we 
find ourselves now, but the world has changed also with 
fracking and so the energy independence issue is in front of 
us. You ask yourself why are we exporting and importing either 
ethanol, exporting or importing ethanol. You ask yourself why 
are we importing and exporting biodiesel when if we need it we 
ought to maybe just be selling it to ourselves instead of 
having to ship it overseas. All this will require, you know, 
changes in laws.
    And I would ask our panelists to not only give us their 
best case story but also to listen to each other, because as we 
move forward we are going to have to move towards compromise 
because a lot of people have raised capital, assumed risk, 
created jobs, great tax bases for our communities, and we will 
be better when we work together than when we work apart and I 
know we can do that.
    And with that Mr. Chairman, again I apologize for having to 
leave, probably well timed. I wish I could take credit for the 
President's decision to have this now, but with that I yield 
back the balance of my time.
    Mr. Whitfield. The gentleman yields back.
    And before I introduce Mr. Rush, I do want to recognize Mr. 
Tom Bliley, former chairman of the Energy and Commerce 
Committee, the distinguished gentleman from Richmond. And when 
I first came to Congress in 1995 he was our chairman and did a 
fantastic job. And Tom, welcome back to the Energy and Commerce 
Committee.
    At this time I would like to recognize the gentleman from 
Illinois, Mr. Rush, for a 5-minute opening statement.

 OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Rush. I want to thank you, Mr. Chairman. Mr. Chairman, 
this is a very important hearing on the implementation of the 
Renewable Fuel Standard. As you can imagine, Mr. Chairman, my 
office has taken dozens of meetings on this important topic for 
both proponents who support the RFS as it is as well as from 
the opponents who would like to see the RFS either modified or 
repealed altogether.
    From its inception I strongly supported this policy and the 
goals that it was first enacted to do. Some of the objectives 
include helping to reduce U.S. dependence on foreign oil, 
enhancing energy security, bolstering the agricultural sector, 
and addressing the challenges of climate change by reducing 
greenhouse gas emissions from the transportation sector, Mr. 
Chairman, are some of the things that I have strongly 
supported.
    Since that time, Mr. Chairman, the energy landscape has 
changed significantly in our nation, and at meeting after 
meeting in my office we have received a host of competing and 
in many cases contrasting information on the impact of the RFS.
    Today I am most interested, Mr. Chairman, in hearing about 
the impact of the RFS on food and agricultural prices as well 
as the issues surrounding the gasoline ethanol blend wall. 
Additionally, Mr. Chairman, with more frequent record-breaking 
temperatures and history making extreme weather events, it is 
imperative that we also examine the impact of the RFS in 
regards to climate change for those who are concerned about 
this very, very critical issue.
    It is my hope that today we will be able to shed light on 
the current status of the program and find more clarity on the 
effectiveness it has had in meeting its original goals. I am 
pleased with the diversity of the panelists and the different 
industry sectors that they represent, as I believe this will 
lead to a more robust and comprehensive debate.
    Hopefully, Mr. Chairman, today's discussion will provide 
clarity and a better understanding of this issue for members on 
both sides of the aisle. I think it is important to hear from 
the various stakeholders on some of these important issues 
surrounding the RFS in a public and transparent setting, where 
they will have the opportunity to respond and rebut other 
witnesses so that members may gain a better idea of what indeed 
is fact and what is fiction in regards to this debate.
    So Mr. Chairman, it goes without saying that I look forward 
to learning more about most of the opportunities and the 
challenges to implementing the RFS as currently drafted, and it 
is my hope that we can work to find an excellent common ground 
on this issue moving forward. With that Mr. Chairman, I yield 
back.
    Mr. Whitfield. The gentleman yields----
    Mr. Rush. No, I yield a minute to Mr. Welch.
    Mr. Whitfield. The gentleman yields to Mr.--OK.
    Mr. Welch. Thank you, Bobby. I thank the gentleman. Thank 
you, Mr. Chairman, for this hearing.
    The RFS mandate has been a well-intended flop. It has not 
helped the environment, it has hurt it. It has not reduced 
fuel--it has increased food costs in this country and in 
foreign countries, and it has done an immense amount of engine 
damage to everyday folks who want to use chainsaws; want to use 
boats, boat motors; want to use motorcycles.
    And I have here a photograph from the Burlington Free Press 
which shows a carburetor that was clean, it used regular gas, 
and this was one that was brought in that has been damaged by 
ethanol. And I have a carburetor here. It will be a little 
tougher to see, but this is from a Suzuki motorcycle owned by a 
veteran. And one side is what would be the condition of the 
carburetor with regular gas. This is the dirty, filthy side 
that is the carburetor from the use of ethanol, and the veteran 
who owned that motorcycle had to pay a bill of $786 just to fix 
that up from the damage done by ethanol.
    So we have got this situation here where in addition to the 
food costs, in addition to the environmental damage, everyday 
folks who are out there riding their motorcycles, veterans, 
everybody using a small engine, using their chainsaw are 
finding that when they leave it there suddenly it is wrecked. 
And in fact my chainsaw got wrecked as a result of ethanol, so 
I have got a chainsaw grievance along with a lot of my 
constituents.
    This was a plan that had bipartisan support, RFS. It had 
the best of intentions, it had the worst of outcomes. It is 
time for us to change it, and I am delighted to be working with 
Mr. Flores of Texas in a strange partnership of the Lone Star 
State and the Green Mountain State. Thank you very much. I 
yield back.
    Mr. Whitfield. The gentleman yields back and the 
gentleman's time has expired. Mr. Upton is not going to take 
the time for an opening statement. Is there anyone on our side 
of the aisle that would like to claim time for an opening 
statement? Mr. Barton. Mr. Barton is recognized for 5 minutes.
    Mr. Barton. Oh, I am not going to use 5 minutes, Mr. 
Chairman. I do want to thank the chairman and Mr. Rush for 
holding this hearing, and I want to thank Mr. Welch and Mr. 
Flores for introducing their bill.
    I was chairman of the full committee when we put the 
original Renewable Fuel Standard in place in the Energy Policy 
Act of 2005. I supported it then. I was ranking member when 
they passed the 2007 Energy Bill that greatly expanded it, and 
I have vehemently opposed the expansion in committee and on the 
floor. And so I have been for it and I have been against it.
    I today think, Mr. Chairman, that you could actually repeal 
it and market conditions would still provide a robust market 
for ethanol and all other alternative fuels. There is no 
question that the oxygenate ability of ethanol is a positive. 
There is also no question that this is not a struggling 
industry that needs the various protections and mandates that 
we have put into the law, and there is also no question that 
you can't meet the requirement, the market cannot meet the 
requirement that the current law requires.
    So I think this is an excellent hearing. I am going to 
listen with an open mind. Again I want to thank the chairman 
and the ranking member and our two bipartisan cosponsors for 
this legislation. I am not sure we can legislate this year, but 
I think it is something that needs to be looked at in the near 
future.
    And I will be happy to yield to Mr. Flores. It looks like 
he wants some time. I yield the balance of my time to Mr. 
Flores.
    Mr. Flores. I thank Mr. Barton for his comments and for 
yielding the time. I also thank Mr. Welch for working with me 
to introduce a common sense, market-driven, bipartisan solution 
to deal with the well-intended law that just hasn't worked out 
the way it should.
    I also want to thank the chairman for holding today's 
hearing. It has been almost 9 years since the RFS was expanded 
under the Energy Independence and Security Act of 2007, and I 
am very pleased that we are revisiting the important role of 
this committee and the Congress to exercise oversight through 
today's hearing.
    One of the biggest concerns that will be discussed today is 
that the 2007 era assumptions of increasing gasoline demand 
turned out to be far too optimistic. And the volumes that were 
set forth in the statute do not come close to recognizing 
today's market reality with respect to gasoline demand. 
Consumers are now faced with a law, actually they are adversely 
impacted with the law that continues to increase a mandate in 
ethanol at a time when they are using less gasoline.
    Last month, Mr. Welch and I introduced the Food and Fuel 
Consumer Protection Act and again this is a market-driven, 
common sense, bipartisan solution. It is a simple one. It 
prevents the RFS mandate from forcing more ethanol into the 
market than is technically and commercially feasible. And with 
that I yield back the balance of my time. Thank you.
    Mr. Whitfield. The gentleman yields back. At this time the 
chair recognizes the gentleman from New Jersey, Mr. Pallone, 
for 5 minutes.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Chairman Whitfield and Ranking 
Member Rush for this opportunity to hear from the 
Administration and many of the key stakeholders on the 
Renewable Fuel Standard program.
    The transportation sector is our country's largest consumer 
of oil and the second largest emitter of carbon pollution, so 
the development of low carbon renewable fuels is certainly 
critical. The RFS program that Congress established in 2005 and 
amended significantly in 2007 has helped extend our domestic 
fuel supply and it has spurred investment in alternative fuel 
production. The RFS has also supported farm incomes and rural 
economy in a number of states.
    In recent years, domestic production of fuel overall 
increased due to expanded domestic production of oil and gas, 
and the production of ethanol has also provided us with a 
stable supply of domestic fuel. And the availability of ethanol 
provided an alternative to MTBE as an octane enhancer and 
oxygenate when MTBE proved to be a problem in water systems 
across the country.
    Despite these successes, there have also been a number of 
challenges. For example, the annual obligation for the EPA to 
set RFS targets has been more controversial and challenging 
than Congress originally anticipated. Moreover, the increase in 
renewable fuel production targets Congress passed in 2007 
anticipated faster and broader based development of cellulosic 
ethanol and other advanced biofuels.
    There are also a number of constituencies, particularly 
equipment manufacturers and their customers including small 
boaters, who still have concerns about increasing the 
percentage of ethanol beyond the ten percent fraction that is 
commonly sold throughout the country. And there are others who 
question whether increasing biofuel production will achieve the 
program's important environmental goals, particularly the goal 
of reducing greenhouse gas emissions from the transportation 
sector.
    I want to thank Assistant Administrator McCabe for coming 
today to discuss the EPA's implementation of the RFS. This is a 
challenging assignment. Every year, EPA must balance many 
different factors with the needs and desires of many assorted 
players throughout the fuel supply chain from production to 
distribution to use. And to some degree, this has been made 
more difficult by the fact that the targets we set in 2007 
assumed that the demand for transportation fuels would continue 
to grow. However, we have actually seen reduced demand 
nationally for transportation fuel due to a combination of 
historically higher fuel prices, increased vehicle fuel 
efficiency, slower growth in vehicle miles traveled, and of 
course the recession.
    So I look forward to hearing more about the implications 
for the fuel market from Mr. Gruenspecht from the Energy 
Information Agency, as well as from witnesses on our second 
panel. During today's hearing we should consider how the RFS 
contributes to the deployment of the low carbon transportation 
system of the future that benefits both our environment and our 
economy, but we should also consider how this program could 
work better to help us meet our climate goals. Fortunately, we 
have an excellent panel of witnesses here today who can speak 
to these matters, so I look forward to hearing their 
perspectives on the RFS program.
    [The prepared statement of Mr. Pallone follows:]

             Prepared statement of Hon. Frank Pallone, Jr.

    Thank you Chairman Whitfield and Ranking Member Rush for 
providing us an opportunity to hear from the Administration and 
many of the key stakeholders in the Renewable Fuel Standard 
(RFS) program.
    The transportation sector is our country's largest consumer 
of oil and the second largest emitter of carbon pollution, so 
the development of low carbon renewable fuels is critically 
important. The RFS program that Congress established in 2005 
and amended significantly in 2007 has helped extend our 
domestic fuel supply, and it spurred investment in alternative 
fuel production. The RFS has also supported farm incomes and 
rural economies in a number of states.
    In recent years, domestic production of fuel overall 
increased due to expanded domestic production of oil and gas. 
The production of ethanol has also provided us with a stable 
supply of domestic fuel. And, the availability of ethanol 
provided an alternative to MTBE (M-T-B-E) as an octane enhancer 
and oxygenate when MTBE proved to be a problem in water systems 
across the country.
    Despite these successes, there have also been a number of 
challenges. For example, the annual obligation for the 
Environmental Protection Agency (EPA) to set RFS targets has 
been more controversial and challenging than Congress 
originally anticipated. Moreover, the increase in renewable 
fuel production targets Congress passed in 2007 anticipated 
faster and broader-based development of cellulosic ethanol and 
other advanced biofuels.
    There are also a number of constituencies--particularly 
equipment manufacturers and their customers, including small 
boaters--who still have concerns about increasing the 
percentage of ethanol beyond the 10 percent fraction that is 
commonly sold throughout the country. And there are others who 
question whether increasing biofuel production will achieve the 
program's important environmental goals, particularly the goal 
of reducing greenhouse gas emissions from the transportation 
sector.
    I want to thank Assistant Administrator McCabe for coming 
today to discuss the EPA's implementation of the RFS. This is a 
challenging assignment. Every year, EPA must balance many 
different factors with the needs and desires of the many 
assorted players throughout the fuel supply chain--from 
production to distribution to use.
    And to some degree, this has been made more difficult by 
the fact that the targets we set in 2007 assumed that the 
demand for transportation fuels would continue to grow. 
However, we've actually seen reduced demand nationally for 
transportation fuel due to a combination of historically higher 
fuel prices, increased vehicle fuel efficiency, slower growth 
in vehicle miles traveled, and the recession.
    I look forward to hearing more about the implications for 
the fuel market from Mr. Gruenspecht from the Energy 
Information Agency, as well as from witnesses on our second 
panel.
    During today's hearing we should consider how the RFS 
contributes to the deployment of the low-carbon transportation 
system of the future that benefits both our environment and our 
economy. But, we should also consider how this program could 
work better to help us meet our climate goals. Fortunately, we 
have an excellent panel of witnesses here today who can speak 
to those matters. I look forward to hearing their perspectives 
on the RFS program.

    Mr. Pallone. I yield the remainder of my time to 
Representative Loebsack.
    Mr. Loebsack. Thank you, Mr. Pallone, and thank you, Mr. 
Chair, for having this hearing. It is very important. I only 
came to Congress in 2007 so I was able to vote on at least the 
2007 bill. Assistant Administrator McCabe, Deputy Gruenspecht, 
thank you for taking the time to come here today to discuss the 
RFS.
    And harnessing the power of our renewable resources is an 
absolutely critical part of our energy portfolio here in 
America. I think we can all agree on that. The RFS, I believe, 
has proven that it works. It has created jobs, it has supported 
our agricultural communities, and it has decreased our 
dependence on foreign oil.
    The RFS has helped bring competition, something that was 
intended, and consumer choice, another thing that was intended, 
to the retail transportation fuel marketplace while reducing at 
least to some degree our dependence on foreign oil imports. In 
addition, the industry supports over 400,000 U.S. jobs that 
can't be outsourced and has contributed some $45 billion to the 
U.S. economy, while in fact reducing the emissions of 
greenhouse gases.
    As you also all know my state is a leader in biofuels, and 
before we get too carried away with ethanol, that also includes 
biodiesel, by the way. That is very important as far as the RFS 
is concerned and it has positively impacted of course our 
domestic energy sources. To help advance greater choice at the 
pump I have also introduced legislation to establish a grant 
program through the USDA to invest in renewable and alternative 
fuel infrastructure. My bill, the Renewable Fuel Utilization, 
Expansion, and Leadership Act, or REFUEL, will create a new and 
retrofit existing infrastructure including pumps for biofuels 
and hydrogen tanks, piping, and electric vehicle chargers so 
that we have not just ethanol and biodiesel.
    Too often, infrastructure constraints are cited as the 
reason for not giving consumers the choices they deserve and 
this is about choices--keep that in mind--and for holding back 
the development of our renewable and alternative energy sources 
that create jobs in Iowa and across the country. The REFUEL Act 
will help bridge that divide by making important investments in 
the infrastructure needed to provide consumers with the choices 
that they want at the pump.
    We must do more to decrease our dependence on foreign oil 
and expand our use of renewable energy sources that boost 
economic development in our rural areas and at the same time 
promote homegrown fuel sources such as biofuels and wind power. 
Administrator McCarthy stated in February of 2016, ``We need to 
get the program RFS back on track. Every gallon of ethanol you 
take out you can only replace with more fossil fuels, so we 
must continue to fight to ensure that our rural communities are 
part of to put our nation back on a sustainable path so that 
those rural communities can do that and create good jobs in our 
rural areas.''
    And I don't have any visual aids with me, but one of them I 
could think of might be a corncob although not necessarily 
that. Also I think if we had a soldier or a Marine here who has 
gone to fight in the Middle East, I think that would be 
important because this is also about making sure that we reduce 
our dependence on foreign oil, and I think we lose sight of 
that sometimes when we talk about the RFS. It is about choices. 
Yes, it is about jobs, but it is also creating a situation 
where we are not so dependent on other countries for oil.
    So thank you for yielding, Mr. Pallone. And thank you, Mr. 
Chair, for having this hearing today and look forward to the 
testimony. Thank you.
    Mr. Whitfield. The gentleman yields back. And that 
concludes the opening statements, so we are now ready for our 
first panel of witnesses and I am delighted that both of you 
joined us this morning. Our first witness is Ms. Janet McCabe 
who is the acting assistant administrator at the U.S. 
Environmental Protection Agency.
    Ms. McCabe, thanks for being with us. You are recognized 
for 5 minutes for your opening statement. Just make sure the 
microphone is on and you know the drill.
    Ms. McCabe. I know the drill.
    Mr. Whitfield. Thank you.
    Ms. McCabe. Been here before.

     STATEMENT OF JANET MCCABE, ACTING ADMINISTRATOR, U.S. 
ENVIRONMENTAL PROTECTION AGENCY; AND HOWARD GRUENSPECHT, DEPUTY 
     ADMINISTRATOR, U.S. ENERGY INFORMATION ADMINISTRATION

                   STATEMENT OF JANET MCCABE

    Ms. McCabe. Thank you, Chairman Whitfield, Ranking Member 
Rush, and other members of the subcommittee. I very much 
appreciate the opportunity to testify on the RFS program today 
and EPA's current proposed rule setting the annual volume 
standards for 2017 and biomass-based diesel volume requirement 
for 2018.
    As has been noted, the RFS program began in 2006 under the 
Energy Policy Act of 2005, and the program was then modified by 
the Energy Independence and Security Act of 2007. The goals of 
that law include moving the United States towards greater 
energy independence and security and increasing production of 
clean, renewable fuels. The law established new annual volume 
targets for renewable fuel that increase every year to reach a 
total of 36 billion gallons by 2022, including 21 billion 
gallons of advanced biofuels.
    Congress included tools known as waiver provisions for EPA 
to use to adjust the statutory targets in specified 
circumstances, including where the statutorily prescribed 
volumes could not be met. After an extensive notice and comment 
process including working closely with our federal partners at 
the USDA and the DOE, EPA finalized regulations to implement 
those requirements and those became effective in July of 2010.
    The Clean Air Act requires EPA to issue annual standards 
for four different categories of renewable fuels: total, 
advanced, biomass-based diesel, and cellulosic. These standards 
designate the percentage of each biofuel category that 
producers and importers of gasoline and diesel must blend into 
transportation fuel, heating oil or jet fuel, and those must be 
issued by November 30th of each year for the following year, 
and 14 months in advance for the biomass-based diesel category.
    On November 30th, 2015, we finalized standards for 2014 
through 2016, and a biomass-based diesel volume for 2017. In 
that final rule, we used the waiver authorities provided by 
Congress to lower the volume requirements for total, advanced, 
and cellulosic below the statutory targets, but only to the 
extent necessary and appropriate in light of supply limitations 
and to levels that will drive ambitious, achievable growth.
    On May 16th of this year, we issued a proposed rule to 
establish the annual percentage standards for cellulosic, 
advanced, and total renewable fuel that will apply in 2017, and 
also the volume requirement for biomass-based diesel for 2018. 
In this proposal, we are proposing to take the same approach to 
setting standards and volume requirements as in last year's 
rule.
    This Administration is committed to supporting continued 
growth and renewable fuels, especially advanced biofuels, 
through this proposed rulemaking. We are proposing volumes that 
once again would require significant growth in renewable fuel 
production and use over historical levels directionally 
consistent with congressional intent. The proposed volumes 
represent increases across the board, and while they are not as 
high as the statutory volumes they are intended to drive 
increased production and use of renewable fuel.
    As proposed, total renewable fuel volumes would grow by 
nearly 700 million gallons between 2016 and 2017. Advanced 
renewable fuel which requires a minimum 50 percent lifecycle 
greenhouse gas emissions reduction would grow by nearly 400 
million gallons. The conventional or non-advanced portion of 
the renewable fuels would increase by 300 million gallons which 
is 99 percent of the congressional target of 15 billion 
gallons.
    Biodiesel which must also achieve at least 50 percent 
lifecycle emission reductions would grow by 100 million gallons 
between 2017 and 2018, which is more than double the 
congressionally mandated minimum level of one billion gallons. 
And cellulosic biofuel which is the most advanced, requires 60 
percent lifecycle reductions, would grow by 82 million gallons 
which is 35 percent increase between 2016 and 2017. We believe 
that these proposed volumes are achievable and consistent with 
Congress' clear intent to drive renewable fuel use even as we 
propose to use the waiver authorities that Congress also 
provided so that we can manage the program responsibly.
    We had a public hearing in Kansas City, Missouri, on June 
9th. There were more than 125 people who spoke there 
representing a broad range of interests. The public comment 
period for our proposed rule will remain open through July 
11th, 2016, and we look forward to reviewing everybody's 
comments and continuing to engage with the stakeholders as we 
do as we work towards a final rule. We also look forward to any 
additional information and data that will come our way that 
will inform our final standards. We are committed to issuing 
those standards on the statutory time frame which would be by 
November 30th of this year.
    We continue to encourage and support production and 
blending of renewable fuels to maximize reductions in 
greenhouse gases. This has and will continue to be a high 
priority for my office and the EPA. We are continually 
monitoring developments in the industry as a result of both the 
RFS program and other programs run by USDA and DOE that support 
biofuels and biofuel infrastructure such as USDA's Biofuel 
Infrastructure Partnership program. And we will continue to 
work closely with our federal partners as we implement this 
statute.
    Again I thank you for an opportunity to be here this 
morning, and I look forward to your questions and to the 
discussion.
    [The prepared statement of Janet McCabe follows:]
    [GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Whitfield. Thank you, Ms. McCabe. And our next witness 
is Mr. Howard Gruenspecht who is the deputy administrator of 
the U.S. Energy Information Administration. Mr. Gruenspecht, 
you are recognized for 5 minutes for an opening statement.

                STATEMENT OF HOWARD GRUENSPECHT

    Mr. Gruenspecht. Chairman Whitfield, Ranking Member Rush, 
members of the committee, I appreciate the opportunity to 
appear before you today. The Energy Information Administration 
is a statistical and analytical agency within the Department of 
Energy. By law our data analyses and projections are 
independent, so my views should not be construed as 
representing those of the Department or any other federal 
agency.
    My testimony has eight main points. First, the RFS program 
is not expected to come close to the legislated target of 36 
billion gallons of renewable motor fuels use by 2022. All of 
EIA's referenced case projections since enactment of the 
present RFS targets in 2007 reflect a shortfall that continues 
to grow through 2022. Virtually all of the shortfall involves 
cellulosic biofuels.
    Second, substantial increase in biofuels use would require 
moving beyond the low percentage blends that account for nearly 
all current biofuels consumption. Third, the hope that large 
volumes of liquid cellulosic biofuels would be available within 
the decade following adoption of the 2007 RFS targets has not 
been realized. The actual supply of liquid cellulosic fuels was 
less than one-tenth of one percent of the legislated RFS target 
for cellulosic biofuels in 2015.
    In mid-2014, EPA began issuing cellulosic RFS credits for 
compressed natural gas and liquid natural gas derived from 
landfills and other biogas recovery facilities that exist 
independently of the RFS program. Cellulosic biogas, which 
unlike liquid cellulosic fuels does not displace petroleum use, 
provided more than 97 percent of total cellulosic biofuels 
credits in 2015.
    A fourth point, ethanol faces demand, distribution system, 
and regulatory challenges that pose barriers to increasing its 
use as a motor fuel. As some of the members have indicated, 
ethanol has three distinct roles in motor fuels markets: 
providing octane, adding to fuel volume, and providing energy 
content. Ethanol has achieved great success in the first two 
roles where it is supported by factors independent of the RFS. 
While these two uses also provide some energy content, 
additional use of ethanol as an energy content source faces 
significantly higher economic hurdles, as shown in Figure 1 of 
my written testimony, and therefore depends more directly on 
the RFS.
    Fifth, while gasoline demand has been very robust over the 
last 18 months, longer term EIA projections shown in Figure 2 
show a declining trend in motor gasoline use, significant 
change from projections made prior to 2010. Even these updated 
projections do not reflect the recently proposed fuel economy 
standards for heavy-duty trucks because our projections are 
based on current laws and regulations, and those proposed 
regulations if finalized would significantly reduce projected 
diesel fuel use.
    Reductions in the long term projections for gasoline use 
mainly reflect higher fuel economy standards actually also 
enacted in 2007 at the same time the RFS targets were changed, 
slower economic growth, possible changes in consumer behavior, 
and until recently higher gasoline prices. So we think that 
some of these adjustments in gasoline demand have likely 
affected the timing of some current RFS compliance challenges, 
but unlike the other factors addressed in my testimony it is 
not a major cause of the persistent past and projected 
shortfalls in biofuels use relative to the legislative targets.
    Sixth, and I think this has also been mentioned in the 
opening statements, actual and projected reliance on oil 
imports is significantly lower than it was when the expanded 
RFS program was enacted in 2007. Figure 3 of my testimony shows 
that reflecting the combined effects of more robust domestic 
petroleum production and lower petroleum demand. Biofuels 
volumes added in response to the RFS program have played only a 
smaller part in reducing net import dependence taking account 
of the fact that ethanol would continue to be used as an octane 
and volume source independent of the RFS, and I think that was 
also made a comment by one of the opening statements.
    Seventh, the near and long term costs of the RFS depend on 
the price of oil, the price of agricultural commodities used to 
produce biofuels, future implementation decisions, and all else 
equal lower oil prices tend to raise the cost of RFS 
compliance.
    And then I just want to close by pointing out that EIA 
remains actively engaged in matters related to the RFS--of 
course we don't get involved in policy matters--including data 
on biodiesel and ethanol production and ethanol blending. We 
provide EPA with short term forecasts for motor fuels use and 
cellulosic biofuels production as required by statute and also 
develop longer term projections. Thank you again for the 
opportunity to testify.
    [The prepared statement of Howard Gruenspecht follows:]
    [GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Whitfield. Well, thank you, Mr. Gruenspecht, and thank 
both of you for your testimony. At this time I would like to 
recognize the gentleman from Texas, Mr. Olson, for 5 minutes of 
questions.
    Mr. Olson. I thank the chair.
    Mr. Whitfield. Sorry, Mr. Barton.
    Mr. Barton. If Mr. Olson is fired up, I will let him go 
first. I am going to be here a while.
    Mr. Olson. The chairman knows we Texans are always fired 
up.
    Mr. Barton. I will yield to Mr. Olson, and then I will go 
on the next Republican, because he is ready.
    Mr. Whitfield. All right, Mr. Olson.
    Mr. Olson. I thank both the gentlemen. Welcome, Mr. 
Gruenspecht, and a special welcome to Ms. McCabe. Every time we 
ask you to show up, you show up, and I appreciate that.
    Together we have seen huge changes in the American energy 
sector. Together we have changed outdated policies to reflect 
our current situation. Together we ended the ban on American 
crude oil exports, a 40-year law that we ended together. 
Together we started shipping American liquefied natural gas 
overseas striking blows to Russia, OPEC, and ISIS. Together we 
have said out with the old, in with the new. Our RFS policy is 
old and I hope together we can make it new.
    Here is an idea for you to consider, Ms. McCabe. As you 
know the obligation to comply with the RFS is currently on the 
refiner. Not all refiners, but some independent refiners. They 
get hit hard by this fact. These refiners don't control the 
ethanol. They generally don't even see it, but yet they are on 
the hook for the mandate.
    What are your thoughts, ma'am, about changing the point of 
obligation or other like issues important to major refiners?
    Ms. McCabe. Well, thank you for that question, Congressman, 
and I indeed am always happy to come here and speak with you 
about these interesting issues and important issues. The point 
of obligation issue which you raise is one that is very much on 
our minds right at the moment and it has been for some months 
because there is a great deal of interest in it from a variety 
of perspectives.
    When the original RFS rule was done in 2010, this was our 
discussion, where would the obligation land. And there was a 
robust and public process, and the final rule with the support 
of many in the industry was that the right place to put it was 
on the refiners. And in recent years we have been hearing 
people question that and say wouldn't it be better to put it 
somewhere else.
    We now actually have several petitions pending in front of 
us to ask us to undertake a rulemaking to look at that issue. 
So we are looking at that. We are talking to people across the 
board. Not everybody is of that view as you might expect. So we 
need to be collecting that information, talking to people. We 
will respond to the petitions. I don't have a time frame to 
give you this morning, but we are looking at them very closely 
and know this is an important issue to look at.
    Mr. Olson. Thank you, good news.
    Mr. Gruenspecht, a question for you, my friend. EPA's final 
rule for the RFS has yet another increase in the renewable fuel 
mandates. To up this work and avoid hitting the blend wall, EPA 
assumes that the use of higher blends of ethanol will increase 
and that demand for E0, fuel without any corn ethanol, will 
remain low.
    EPA's estimated projections that demand for E0 will only be 
200 million gallons going forward per year, yet boat owners and 
chainsaw owners and small engine owners still buy plenty of E0 
to avoid damaging their engines. In fact, in a ``Today in 
Energy'' piece EIA put out this May, you all said that 
Americans used 5.3 billion gallons of E0 in 2015. E0 is really 
hard to find, yet somehow motivated Americans have found a way 
to buy over five billion gallons of it.
    EPA projects that E0 use will be, again 20 million gallons 
in the future. You guys are about five billion gallons apart 
going forward. As they say in Texas, that is a big E0 enchilada 
to swallow. My question is, how likely is it that E15 use will 
explode to by five billion gallons or that if that is not going 
to happen, how likely is it that E0 will sink by 96 percent and 
get down to 200 million gallons per year?
    Your thoughts with that, sir?
    Mr. Gruenspecht. I guess so. So yes, EIA does data work and 
analysis work. And what we have put out in our data is data. We 
know how much E0 is produced. We know how much is exported. You 
know, there is some, a little bit of ethanol that we can't 
account for and so we kind of assume that that was used to 
blend some of the E0 down and then we came up with that number.
    That is not a statement about what should happen or might 
happen. You know that is a statement looking back with the data 
we have available as what has been happening. I don't think 
that necessarily there are differences--well, EPA should 
obviously speak for itself. But our statement is not about what 
should happen or how much E0 is needed for certain uses, it is 
just a statement that we know, we think we know how much of 
this is being absorbed by domestic consumers. Now people want 
something----
    Mr. Olson. Ms. McCabe, do you coordinate at all with the 
EIA? Do you coordinate with them and get their input? Because 
he said it is five billion gallons per year. You guys are down 
to 200 million. I mean, five billion, 200, it is way off. So do 
you listen to them at all?
    Ms. McCabe. No, we certainly coordinate with them very 
closely. This is a very recent report and as soon as it came 
out our staff was on the phone with Howard's staff very quickly 
to make sure that we understand what is behind those numbers. 
Every time we go to a proposal we have got a set of information 
in front of us. We do our best to project into the future, 
which is what our job is about. And then between proposal and 
final not only do we get information from the stakeholders but 
we get further updates from the EIA, and those are absolutely 
informative to us as we finalize our rule.
    Mr. Olson. But you shouldn't be surprised. You should work 
together. I yield back.
    Mr. Gruenspecht. And I would also say that in that article 
again just factually that over the last 3 years the calculated 
use of E0 to final consumers, has been dropping. So again, but 
you correctly cite what was in the article.
    Mr. Whitfield. The gentleman's time has expired. At this 
time the chair recognizes the gentleman from Illinois, Mr. 
Rush, for 5 minutes.
    Mr. Rush. Thank you, Mr. Chairman. Administrator McCabe, 
the issue of RFS seems to have morphed into an all or nothing 
scenario where there is no room for common ground or 
compromise. Almost immediately after the EPA finalized the RFS 
volumes for 2017, your agency was attacked from both sides of 
the debate. Supporters believed the volumes were too low while 
opponents thought they were too high, and both sides are 
bringing lawsuits against the agency.
    How do you respond to these charges and did the agency 
really foresee being sued by both sides?
    Ms. McCabe. We were not surprised to be sued by both sides, 
Congressman. And there are some important issues here and I 
think once the courts speak to those issues there will be more 
clarity going forward.
    Our job is to try to implement the statute, and as you say 
we haven't pleased everybody entirely. This statute is, and 
this program is about choice, it is about diversity, it is 
about providing incentives and opportunity for cleaner fuels to 
compete in the marketplace, so you are going to have people 
from different vantage points having very strong views about 
it.
     But we think that we are doing what we are supposed to do, 
which is to look at the information, to talk to everybody, to 
understand the industry as well as we can, and to do our very 
best to implement what we understand the intent of Congress to 
be, which is to have more renewable fuels in our transportation 
supply.
    Mr. Rush. On the issues that surround the RFS, the issues 
that have been discussed today, and there are some issues that 
we haven't talked about today, but is it your opinion that the 
EPA has the tools and the authority to deal with the challenges 
as they arise or is there some more that the Congress should be 
doing?
    Ms. McCabe. Well, I believe that Congress gave us the tools 
in the statute that we need in order to implement it. And as 
has been recognized today, the world changes and certainly over 
the last decade the world has changed considerably. The world 
will change. We will come back here in 2 years and it will be 
different again, and 5 years and 10 years.
    And Congress had a long vision for this program, and I 
think that is one of the challenges that people are seeing is 
that it takes a while to introduce this kind of change into a 
market system. But Congress gave us clear goals, they gave us 
clear criteria that we are supposed to consider, and they gave 
us the waiver authority to use in situations where in our 
judgment regulating the statutory volumes was just not 
feasible. So we are comfortable moving forward with the tools 
that Congress has given us.
    Mr. Rush. I would like to switch lanes if I could. What is 
the EPA's views on the so-called blend wall? Does the agency 
have concerns surrounding this issue, and if so how are these 
issues and these concerns being addressed by the agency?
    Ms. McCabe. So the blend wall is a term that people use to 
refer to the amount of ethanol that is generally blended into 
E10. which is ten percent, and if you go above that amount it 
is referred to as exceeding the blend wall. In order to reach 
Congress' statutory volumes there needs to be more ethanol in 
the system than can be absorbed just through E10 and we think 
that that is doable through blends like E15 and E85, and of 
course there are other types of renewable fuels that are being 
developed and can get into the system as well.
    So this is one of the key issues of debate. This proposal 
that we put out would call for ethanol above that ten percent 
ceiling, but we think in a responsible and a doable way that 
will help encourage the higher ethanol blends into the system.
    Mr. Whitfield. The gentleman yields back. This time the 
chair recognizes the gentleman from Texas, Mr. Barton, for 5 
minutes.
    Mr. Barton. Thank you. Thank you, Mr. Chairman. Mr. 
Gruenspecht--is that correct, Gruenspecht? Your Figure 2 that 
in your testimony--I want to make sure I understand this. In 
the estimate, the original estimate back in 2007, if I read it 
correctly your agency estimated that we would be using about 
ten million gallons of gasoline a day; is that correct? The 
little blue line on----
    Mr. Gruenspecht. Yes, that is approximately ten million.
    Mr. Barton. And diesel was about four million a day; is 
that right?
    Mr. Gruenspecht. Yes.
    Mr. Barton. OK. How many gallons of gasoline are we using a 
day right now?
    Mr. Gruenspecht. I believe that this year we actually 
expect gasoline demand to be about 9.3 million barrels a day.
    Mr. Barton. Nine, so a million less.
    Mr. Gruenspecht. Yes.
    Mr. Barton. And what is it on diesel?
    Mr. Whitfield. Use your mic.
    Mr. Gruenspecht. I am sorry. Right, so this year, gasoline 
about 9.3 million barrels a day.
    Mr. Barton. And on diesel it is----
    Mr. Gruenspecht. Diesel I am not quite sure.
    Mr. Barton. But is it safe to say it is less than you 
estimated?
    Mr. Gruenspecht. I think it may be a little bit less.
    Mr. Barton. OK.
    Mr. Gruenspecht. On the gasoline it has mostly to do, 
frankly, so the same legislation that enacted the RFS also 
enacted fuel economy standards, and this AEO 2007 line, again 
these reference cases use current laws and regulations.
    Mr. Barton. Well, the point I am trying to make is the 
estimates that were used when we passed the expanded RFS in 
2007 were gasoline volumes and diesel volumes going up, and in 
fact they are not. But the volume of ethanol that is required 
to be used is growing substantially. Is that not true?
    So we have created a situation, I mean, if you give the 
best of intentions to the Congress 9 years ago, those estimates 
that the volumes were based on haven't happened.
    Mr. Gruenspecht. I would agree with that.
    Mr. Barton. Well, you have to because that is a fact. I 
mean----
    Mr. Gruenspecht. Right. Well, on the other hand, I mean, so 
far be it from me to criticize Congress, but in the very same 
piece of legislation----
    Mr. Barton. You are the only person in America that doesn't 
if you don't, so----
    Mr. Gruenspecht. Well, maybe I will cross over to the other 
side then and join the majority. Not the majority here.
    But actually, remember, in the same piece of legislation, 
you raised the fuel economy standards. So the notion of using 
that projection and saying that is what we thought, I realize 
that different groups probably were working on the RFS 
provision----
    Mr. Barton. Well, my point, it would be one thing if we had 
projections from 9 or 10 years ago that have happened so that 
all these volume increases could be absorbed because gasoline 
usage has increased, but that is not happening.
    Mr. Gruenspecht. Right. I would agree with that.
    Mr. Barton. And it is not expected to happen.
    Mr. Gruenspecht. Right. And it is something, I agree, it is 
a factor, but the notion of 36 billion gallons of renewable 
fuels, you know that kind of----
    Mr. Barton. It is fantasy, and my word fantasy. That is 
fantasy.
    Mr. Gruenspecht. Well, I am not going to say that.
    Mr. Barton. I know. You can't say it but I can. So I am 
going to ask the EPA representative now. How long does EPA keep 
insisting that you can make the law work? At what point in time 
do you agree with the majority of this panel that as currently 
written it is simply not workable?
    Ms. McCabe. Congressman, it is our job to implement the 
laws that you all have----
    Mr. Barton. I didn't ask you what your job was. I am asking 
you for a policy statement. You are the highest ranking EPA 
official here.
    Ms. McCabe. Yes. Well, it is really not up to me to speak 
to the legislation itself or any changes that Congress may be 
thinking about, although we are happy to work with you on it.
    Mr. Barton. Let me ask you a different question. I am not 
going to let you stall me for the next 40 seconds. What would 
happen if we just repealed the RFS, just repealed it?
    Ms. McCabe. Well, the----
    Mr. Barton. Would we still use ethanol?
    Ms. McCabe. Oh, yes.
    Mr. Barton. Wouldn't we still use a lot of ethanol?
    Ms. McCabe. There would be ethanol put into the gasoline, 
to E10 gasoline. There is a lot of investment already in higher 
blends of E10, or ethanol. I don't think I am in a position to 
speak to what might happen to that if the law were repealed 
though.
    Mr. Barton. But there would still--the ethanol market 
wouldn't disappear if we repealed the RFS?
    Ms. McCabe. I don't expect that it would.
    Mr. Barton. The market would require that we use ethanol.
    Ms. McCabe. As Howard mentioned, there are a number of 
values that ethanol adds to the system.
    Mr. Barton. I agree. Unfortunately my time is expired, Mr. 
Chairman.
    Mr. Whitfield. The gentleman's time has expired. At this 
time we will recognize the gentleman from Vermont, Mr. Welch, 
for 5 minutes.
    Mr. Welch. Thank you very much. I want to ask Administrator 
McCabe a few questions, and by the way Mr. Barton, it is our 
job to pass a law and yours to implement it. Thank you for 
understanding that. But it is your job to do the reports that 
Congress has asked for. And there was an EPA triennial report 
to Congress in 2011, and in that report it indicated that the 
most plausible land use changes and production practices from 
the ethanol mandate will likely be neutral or slightly 
negative. It also concluded that the majority of negative 
impacts of the RFS to date have been associated with corn 
ethanol. That report now is supposed to be done, updated, and 
it is really 5 years overdue and there has been no indication 
from EPA as to when Congress can expect to receive it. So my 
question is when does the EPA plan to send the next Triennial 
Report on the environmental impacts of RFS to Congress as 
required by law?
    Ms. McCabe. Thank you, Congressman. We don't like missing 
deadlines and we realize that there are deadlines in the 
statute that we have not made. I will tell you that our 
emphasis over the last several years has been on doing the 
annual volume standards which is what we felt the absolute 
priority in order to keep the program going.
    Mr. Welch. So when do you think we might get that?
    Ms. McCabe. I don't have a date to give you. We are always 
looking at this information. We work with our Office of 
Research and Development on it.
    Mr. Welch. All right, I will go on to the next question. It 
is helpful for us to have that because this data is really 
important in assessing whether the hopes and aspirations of the 
Congress about the original law are actually working or they 
are not. A second area of concern is the use of land. The 
USDA's Farm Service Agency data shows that about 400,000 acres 
of previously uncultivated land was converted to cropland just 
between 2011 and 2012. And a University of Wisconsin-Madison 
study found that biofuel crops expanded onto seven million 
acres of new land between '08 and 2012, including millions of 
acres of native grasslands. How many acres of native grasslands 
and wetlands have been torn up or drained, respectively, since 
the RFS was passed in 2007, and does this land use change total 
more than a de minimis amount of acres that the EPA predicted 
in the 2010 RFS2 rule?
    Ms. McCabe. I don't have the exact numbers with me, 
Congressman, although we will be glad to provide them and 
follow up. But I will say that in each annual volume rule we 
look at the net use of land and whether in a net sense it has 
grown or gone down.
    Mr. Whitfield. Yes, and that is very much in dispute as a 
methodology because there is an immense loss of wildlife 
habitat where because of the incentives that Congress has 
passed, not just our RFS but we used to have the tax credit and 
we used to have the tariff barrier, it really promoted the 
over-cultivation of land. Then finally, there is a hope, there 
was a hope that the greenhouse gas emissions would be reduced 
by using ethanol, and it has turned out that most of the 
evidence indicates that is not the case. The corn ethanol's net 
emissions over 30 years are expected to be about 28 percent 
higher than emissions that would result from the use of 
gasoline over that same period. And in 2011, the National 
Academy of Sciences' study on RFS also questioned the 
greenhouse gas emission reduction potential of corn ethanol. 
Given that the majority of RFS gallons produced to date have 
been corn ethanol, what has the overall impact of the RFS been 
on the climate?
    Ms. McCabe. Well, again we would be glad to follow up with 
more specifics, but I will say that the statute focuses on 
developing these advanced biofuels and moving those into a 
larger portion----
    Mr. Whitfield. Right. This gets us back to Mr. Barton's 
question. I mean, we have to answer it. We created the policy 
so we have to change it. But what is extremely helpful to us is 
to get real-time information about the climate impacts, the 
habitat impacts, the greenhouse gas emissions, so I thank you 
for your appearance here and I yield back the balance of my 
time.
    Mr. Whitfield. The gentleman yields back. At this time I 
recognize the gentleman from Ohio, Mr. Latta, for 5 minutes.
    Mr. Latta. Well, thanks, Mr. Chairman, for the hearing 
today and for our first and second panel of witnesses for being 
with us today. We appreciate your testimony and the information 
you are giving us today. Administrator, if I could ask you the 
first question, on your second page of your testimony you speak 
of the waiver authority in setting recent standards and the 
proposed standard. Would you elaborate on the waiver authority 
and how EPA uses this authority on the waiver?
    Ms. McCabe. Sure, I would be happy to. The statute provides 
two types of waiver authority: the cellulosic waiver and the 
general waiver. When we project the amount of cellulosic fuel 
that we think will be available in the year that we are setting 
the standard for, if it is below the statutorily prescribed 
amount then we are to lower it. And we have the ability to then 
lower the amounts of advanced and total fuel by the same 
amount. We are not required to, but we can. That is the 
cellulosic waiver authority. The general waiver authority, 
Congress provided that under two circumstances can we waive 
down or lower the statutory volumes on advanced and total, and 
one of those is when we find that there is an inadequate 
domestic supply. And so we have proposed in this rule, as we 
did in the rule we did last year, to use both of those waiver 
authorities to set expected standards that are lower than what 
the statute would require.
    Mr. Welch. Thank you.
    Mr. Gruenspecht, in your testimony on your point 6, and I 
know we have had some discussion already about this, you 
discussed the calculations for net imports for overall U.S. 
petroleum consumption and EIA's determination of what has led 
to the decline. Would you comment on this data and the 
conclusions again that you have come up with on that?
    Mr. Whitfield. Is your microphone on?
    Mr. Gruenspecht. I expected Ms. McCabe to get most of the 
questions, so--U.S. crude oil production has risen rather 
dramatically, as I am sure other hearings here have explored, 
from about five million barrels a day to over nine million 
barrels a day and then have since fallen a bit with the lower 
oil prices. And that was clearly a major contributor.
    The other major contributor to reduced dependence, on net 
dependence on oil imports, were greater fuel economy, which 
many people, I think, would view as a very positive thing. 
There have been some economic problems in the country that 
people might not view as a very positive thing, but those 
certainly have also affected fuel consumption. And then I think 
the increased use of biofuels has also had some contribution.
    But the question is how much have biofuels increased 
because of the RFS? As much of the conversation has pointed 
out, there are a lot of biofuels that would be used with or 
without the RFS, a lot of ethanol. So in looking at how much 
biofuels have increased because of the RFS, if you would 
convert back those gallons into million barrels per day that is 
actually sort of a much smaller number than the increase in 
crude oil production, or I think the reduction in consumption 
due to greater fuel efficiency. I think that is what the 
testimony says.
    Mr. Latta. Well, let me ask you. Also in your testimony, 
because you also mentioned point 5, you also discussed the 
projected decline in the motor gasoline use and you say that it 
is not a cause of past or projected shortfalls. Could you 
explain that?
    Mr. Gruenspecht. Sure. That really goes back to Mr. 
Barton's----
    Mr. Latta. Mr. Barton's question, right.
    Mr. Gruenspecht [continuing]. Question. So sure, remember 
that the program calls for getting to 36 billion gallons by 
2022. And yes, clearly you could, if fuel consumption was 
somewhat higher as in those 2007 projections, you could put 
more ethanol into E10 with more gasoline consumption, but that 
would get you nowhere near the 36 billion gallons. So clearly 
the statute was not envisioning getting to 36 billion gallons 
based on E10 type blending into the gasoline pool. The statute 
was envisioning something completely beyond that in terms of 
transformation of the fuel system and that has very little to 
do with exactly whether we are consuming ten million barrels a 
day of gasoline or 9.3. And that is what I think that statement 
meant.
    Yes, it has had an effect. But no, it is not that 
everything would be great with this program in terms of meeting 
the legislative targets if those AEO 2007 demand projections 
for gasoline had been realized.
    Mr. Latta. Thank you. Mr. Chairman, my time is expired and 
I yield back.
    Mr. Whitfield. The gentleman yields back. At this time I 
will recognize the gentleman from Iowa, Mr. Loebsack, for 5 
minutes.
    Mr. Loebsack. Thank you, Mr. Chair. Thank you again for 
having this hearing. I think that while we debate, this whole 
RFS issue, it is really important that we get the facts on the 
table, and that is hopefully what we are doing today. No matter 
which side of the issue you are on, I just think that often in 
Congress we have anything but a fact-based discussion. So this 
is important for you folks to be here and I do appreciate both 
sides of the issue and the questions that are being asked.
    It is clear, Madam Administrator, that you are asking 
farmers and our rural communities, I think, to shoulder the 
consequences of the so-called blend wall. I think it is also 
clear that there are other logical and common sense ways around 
the blend wall.
    If the concern of the blend wall is the price of RINs, for 
example, it seems economical to think that if oil companies 
were indeed concerned about RIN prices they would invest in 
more biofuel infrastructure to keep RIN prices down.
    Can you tell me what is being done by the EPA to look into 
the big oil companies' control of the market and lack of choice 
for consumers and why these aren't being addressed as part of 
the blend wall concern?
    Ms. McCabe. Well, our process of setting the annual RVO 
requirement each year, is all about setting that expectation 
for the producers because they are the obligated parties. And 
the RIN mechanism and the RIN prices you have identified is a 
mechanism to create incentives for the refiners to actually 
make sure that there is more alternative fuel in the system.
    There are also programs such as the ones at USDA that help 
provide encouragement and funding to increase infrastructure 
and investment and those that will continue to make this more 
attractive in the market. And as you say, it is about consumers 
and about choice, and if people want the fuel it will be there 
for them. The RIN system provides that extra incentive and the 
requirement, the obligation, does as well.
    Mr. Loebsack. OK. I have a question about in the proposed 
rule where you state, and I quote, to date we have seen no 
compelling evidence that the nationwide average ethanol 
concentration in gasoline cannot exceed ten percent, unquote.
    So with that statement in mind, why do you feel the need to 
roll back this policy based on demand and the so-called blend 
wall when you readily admit that we as a nation can go beyond 
ten percent ethanol in the fuel supply?
    Ms. McCabe. Well, we haven't rolled back the requirement at 
all, and in fact our proposed rule would require ethanol above 
ten percent in the system. I think it is about 10.4 percent. 
And so that is exactly what we do in considering the waiver 
where the statutory volumes would go significantly beyond that 
ten percent.
    Our evaluation is that those are not realistic or feasible, 
our job then as we see it is to set a volume that is as close 
to that statutory volume as we think is appropriate. And this 
proposal will require more ethanol or more renewable fuel. It 
will be served by whatever fuel is competitive and makes it 
into the system. But it accommodates certainly more ethanol 
than ten percent.
    Mr. Loebsack. Well, the third thing I want to address is, 
it was brought up by Mr. Welch--and by the way, I think it is a 
good thing that Democrats disagree with Democrats and 
Republicans disagree with Republicans and not just Democrats 
and Republicans disagreeing. We don't hear too much about that 
out there in the rest of the country.
    But at any rate, the intent of the RFS was to help the U.S. 
become more energy independent and secure while also reducing 
greenhouse gas emissions. And I take Mr. Welch's point about 
sort of evaluating that on the part of the EPA. Each gallon of 
renewable fuel taken away can only currently be replaced by a 
gallon of gasoline and it doesn't seem to help address our 
climate concerns and has a potential to greatly reduce 
investments in the next generation of biofuels which promise 
even more greenhouse emissions, I would argue, greenhouse gas 
reductions, excuse me.
    Can you tell me how the potential RVOs contribute to the 
EPA and Administration's goal of greenhouse gas reduction now 
and into the future and how we might be able to measure that to 
address Mr. Welch's question as well?
    Ms. McCabe. Well, Congressman, I think it was you that said 
earlier that every gallon of renewable fuel that replaces a 
gallon of petroleum is bringing the benefits of that fuel. And 
especially with advanced biofuels, the greenhouse gas 
advantages of that are considerable.
    I will also say in answer to your question that, as I have 
said already, this program has a long trajectory and we are 
still in the early days in terms of the system is really 
gearing up to produce the kinds of fuels that Congress was 
looking for. So I think that people will agree that as this 
continues to be implemented people will be able to see more and 
more actual impact. But even today when you use those renewable 
fuels you are replacing petroleum and moving toward that goal 
that Congress set.
    Mr. Loebsack. Thank you. Thank you. Thank you, Mr. Chair.
    Mr. Whitfield. The gentleman's time has expired. At this 
time I recognize the gentleman from Pennsylvania, Mr. Pitts. 
OK. At this time we will recognize the gentleman from West 
Virginia, Mr. McKinley.
    Mr. McKinley. Thank you, Mr. Chairman. Two quick questions 
if I could, Ms. McCabe, and again welcome back. It is my 
understanding that you can't blend ethanol with diesel fuel and 
the market will not accept more than two to five percent of the 
biodiesel blend in diesel; is that correct?
    Ms. McCabe. Well, I am not an expert on this issue. I would 
be glad to get you specific answers. But there is a blend 
concept relative to diesel as there is----
    Mr. McKinley. Under biodiesel we might be able to do that 
two to five percent, but the EPA imposes the same proportional 
RIN obligation on all refiners, even some that produce 
significantly more diesel than gasoline. From what I 
understand, these diesel-rich refiners can't separate enough 
RINs to meet their obligation and so they are forced to buy 
RINs to offset that. And one in my district it is going to cost 
him millions of dollars and they are just a small boutique-type 
refinery that is being hurt with this.
    So I am curious, can't we develop or would you be willing 
to develop a refiner's obligation for corn at one level, excuse 
me, ethanol on one for gas and a separate one for diesel fuel? 
Would that not make sense that we separate the two rather than 
treat them as equal because they are not? Would that make any 
sense to you?
    Ms. McCabe. Well, I don't think that is the way that the 
statute was set up, and through the way the statute was set up 
and then the rules that EPA set up--and I wasn't there at that 
time so I wasn't personally involved, but the notion that the 
RIN market as a big open and flexible and liquid market was the 
best tool for the refiners to be able to meet their obligations 
under----
    Mr. McKinley. OK. But would it make sense to have two 
separate obligations, one for diesel and one for gasoline?
    Ms. McCabe. We would be glad to talk with you about that 
further.
    Mr. McKinley. Let us pursue that a little bit because I 
think we have a unique situation with a small refinery that is 
being penalized because they are producing far more diesel than 
gasoline but yet they have this problem.
    Let me go to another question. Does the EPA assume that 
their RIN bank will increase or decrease once the obligated 
parties begin reporting their RIN compliance for 2014, 2015, 
and 2016? Do you think it is going to increase or decrease?
    Ms. McCabe. I don't know that I have an opinion right now. 
We watch these numbers on an ongoing basis and I think the RIN 
bank has been relatively stable. You know, people can, they 
have these credits, they can use them the next year and so they 
roll over.
    Mr. McKinley. OK. But if perhaps the RIN bank is depleted, 
if it is depleted which apparently that is what a lot of 
refiners are expecting that to happen on it, would the EPA 
consider adjusting their proposal to account for the shortage 
of RINs in the market?
    Ms. McCabe. Well, we think that the RIN bank is a really 
important feature of the program because it provides that 
cushion for manufacturers and they accumulate RINs in a RIN 
bank to provide them with that kind of security. So in the 
proposal that we put out, we designed it in a way that did not 
have an expectation that the RIN bank would be used to satisfy 
these obligations.
    Mr. McKinley. OK. I yield back the balance of my time. I 
hope that maybe we can sit down and talk about how we might be 
able to treat the small refinery different than someone else. 
Thank you very much. I yield back.
    Mr. Whitfield. The gentleman yields back. At this time the 
chair recognizes the gentleman from New York, Mr. Tonko, for 5 
minutes.
    Mr. Tonko. Thank you, Mr. Chair.
    Ms. McCabe, what are the greenhouse gas emission benefits 
of advanced biofuels, and just how much cleaner are they 
required to be?
    Ms. McCabe. Per Congress, advanced biofuels have to be 50 
percent cleaner and cellulosic have to be 60 percent cleaner.
    Mr. Tonko. And can you give your perspective on the state 
of the advanced biofuels industry in terms of perhaps domestic 
production how much has been added, and into the future what is 
the expected growth rate in the coming years?
    Ms. McCabe. Yes. That is the question, Congressman, so we 
stay in very close touch with the domestic industry. There is 
the biodiesel industry, which has had a very optimistic and 
good growth and continues to and has invested and is producing 
increasing amounts of volume.
    On the cellulosic side that has been a little bit harder 
for those firms to get going. There are, however, a handful of 
firms in the country that are now starting to produce actual 
volumes and generate RINs. That is very encouraging. It is 
still at a pretty small level and certainly way below what 
Congress would have expected by now or was hoping for by now. 
But we see it on an upward trend. That is why it has been our 
focus to get these volume standards back on track, get them out 
on time so that there is more certainty in the market for those 
to develop.
    We have done some, working on some other things, improved 
our pathway approval process which is ways for people to come 
in with new production processes to get those approved to be 
able to generate RINs. We are now processing those very, very 
quickly so that those can move through and we have I would say 
a study stream of those. So I think it is on the upturn for 
sure.
    Mr. Tonko. And you certainly see some of those barriers 
being lowered now from----
    Ms. McCabe. I think with certainty in the market, with 
greater consumer acceptance and desire for a variety of fuels 
that we will see those penetrating more.
    Mr. Tonko. Thank you. And Mr. Gruenspecht, I believe for 
the first time since the 1970s there are higher levels of 
carbon dioxide emissions from the transportation sector than 
from the electricity generation sector. Is that accurate?
    Mr. Gruenspecht. I think that may be coming to be the case 
mostly because of the drop in the electricity sector carbon 
dioxide emissions.
    Mr. Tonko. And what factors, are there factors that would 
enable the transportation numbers to overcome the electricity 
numbers?
    Mr. Gruenspecht. I am not sure I understand the question, 
sir.
    Mr. Tonko. Well, if there is now this overwhelming or this 
bypassing of the electricity carbon emission numbers by the 
transportation sector, how would you explain that phenomenon 
from having happened?
    Mr. Gruenspecht. Well, again, primarily driven by the drop 
in the electricity sector with less coal fire generation, more 
renewable generation, more natural gas generation which is much 
lower in carbon emissions than coal-based generation.
    On the transportation side, I think we have significant 
fuel economy standards that are being phased in over, you know, 
through for light duty vehicles through 2025. In the present 
environment right now, I think we have rising gasoline 
consumption. There is interesting questions as to why that is 
the case, so there may be obviously lower gasoline prices, a 
lot of job creations in recent years, so when people get jobs 
they drive to work often. So lower gasoline prices, drive to 
work more, and also the vehicles that people are buying are 
changing.
    So yes, present each year the fuel economy standards are 
getting tougher, but remember there are separate ones for 
depending on the footprints of the vehicles. So if the mix 
between larger and smaller light duty vehicles, let's say, what 
are called light trucks and cars, if the balance is shifting 
more toward light trucks you will find even with the standards 
getting tougher for each of them maybe the fuel economy of new 
vehicles, let's say over the last couple of years, has actually 
not decreased.
    Of course those new vehicles only get added to the fleet 
stock of vehicles, but I think the rate of change in fleet fuel 
economy has not declined as much because of some of these 
changes as some people might have thought.
    Mr. Tonko. OK. Well, thank you for that. And with that Mr. 
Chair, I yield back.
    Mr. Whitfield. The gentleman yields back. At this time the 
chair recognizes the gentleman from Kansas, Mr. Pompeo, for 5 
minutes.
    Mr. Pompeo. Thank you, Mr. Chairman.
    Ms. McCabe, in your opening testimony you said we believe 
these proposed volumes are achievable. You listed a series of 
volumes for that. Do you really think they are all achievable? 
Do you think that without RINs do you think those volumes will 
be reached?
    Ms. McCabe. The ones that we have proposed?
    Mr. Pompeo. Yes.
    Ms. McCabe. We do think that those are reasonably 
achievable.
    Mr. Pompeo. Great. We will come back in a year and see how 
you score against that. Your track record is pretty poor in 
achieving that whether those proposals have exceeded, so this 
would be a first. That would be great. I hope you are right. 
Now let me just keep going.
    Ms. McCabe. All right.
    Mr. Pompeo. We talked about the obligated party with Mr. 
Olson for a moment. You are convinced you have the authority 
without statutory change to change the obligated party. That 
is, it is an administrative task. You have the authority if he 
has the authority to change who the obligated party is. Is that 
correct?
    Ms. McCabe. I believe that is right. We did it by 
regulation to begin with.
    Mr. Pompeo. I agree. And in 2010 when RFS2 came out, you 
said that if the RIN market went--I want to summarize because 
it is long. If there were problems in the RIN market you would 
revisit this, and you said now in light of the petitions you 
have received you are in fact revisiting who the appropriate 
obligated party might be.
    Ms. McCabe. We are looking at those issues, yes.
    Mr. Pompeo. But you are not willing to give us any timeline 
for when you might tell us what it is, your ultimate judgment 
comes to be?
    Ms. McCabe. I don't have a timeline right now.
    Mr. Pompeo. Great, thank you. You said where at the 
beginning of the program a little bit earlier it ends in 2022 
in one sense. That is, the requirements end. The program, 
however, continues forever. Tell me what restrictions there are 
on what volume levels will be set by the EPA after 2022.
    Ms. McCabe. This is what I understand from the statute. The 
statutory volumes end in 2022 as you said, the EPA is then 
directed to set those thereafter. We are to do it based on our 
review of the implementation of the program on the list of 
criteria considerations that Congress put in. And I believe 
there are two minimum expectations, one relates to biodiesel 
and one relates to advanced and that we are to have minimum 
volumes at least as great as the last ones we set.
    Mr. Pompeo. For those two items?
    Ms. McCabe. Yes, I believe that is right.
    Mr. Pompeo. I think that is right as well. So it is the 
case that you could completely eliminate the corn based 
requirement. That would be within your statutory authority to 
completely eliminate the corn-based requirement post-2022 
volumes that are set forth in the statute.
    Ms. McCabe. I haven't looked at that question explicitly, 
but I don't believe there is an expectation in the statute 
itself with respect to what is not advanced. There is no corn-
based or conventional mandate in the statute. It is what fills 
up the space between advanced and total.
    Mr. Pompeo. I think that is right. The statute specifically 
lists environmental impact as one of the criteria that you 
should use including climate change as criteria for setting 
those volumes. Do you think that corn-based ethanol has a 
negative environmental impact?
    Ms. McCabe. I think that this is a challenging question 
with many considerations, and I think in----
    Mr. Pompeo. But what do you think? You have been looking at 
this for an awfully long time.
    Ms. McCabe. So in some respects there are greenhouse gas 
benefits. A lot of it depends on the feedstock and the 
particular lifecycle elements of any particular feedstock 
including corn. There are some advanced fuels that can be made 
with corn materials as well as conventional corn ethanol.
    Corn ethanol has differing impacts on other environmental 
features such as air quality. In some cases it reduces air 
pollution, in other cases it may increase air emissions. So it 
is a very mixed picture.
    Mr. Pompeo. The Administration entered into what they 
commonly called the Paris Agreement. Assuming that the United 
States is still party to the Paris Agreement in 2022, would the 
EPA consider that as a factor as it is evaluating America's 
attempt to comply with its commitments under the Paris 
Agreement? Would the EPA consider that as it is deciding what 
the appropriate level should be from 2022 and beyond?
    Ms. McCabe. I can't speak to what the EPA might do in 2022. 
I think its first priority would be to implement the statute.
    Mr. Pompeo. Right. But I am asking would it be appropriate 
to consider an agreement, a climate change agreement that the 
Administration entered into as a criteria as it is evaluating 
whether or not its levels that it sets post-2022 would comply 
with the statute?
    Ms. McCabe. Well, I think that the RFS and other programs 
that are climate focused provide the support for the United 
States' commitment internationally, not the other way around. 
But I can't speak for a future EPA.
    Mr. Pompeo. Do you believe you would have in 2023 the 
statutory authority to restructure the RFS to mirror the 
California Low Carbon Fuel Standard Program? Could you do that, 
would have the authority to do that?
    Ms. McCabe. I don't know, Congressman, but would be happy 
to follow up with conversation on that point.
    Mr. Pompeo. Thank you. I yield back.
    Mr. Whitfield. The gentleman yields back. At this time the 
chair recognizes the gentleman from Virginia, Mr. Griffith, for 
5 minutes.
    Mr. Griffith. Thank you very much, Mr. Chairman. I do 
appreciate that. Thank you all for being here today.
    I am trying to sort some of these things out. I am 
concerned about the comments about the wildlife habitat that 
has been destroyed as a part of this that Mr. Welch brought up 
earlier. And I thought it was really nice that one of my 
colleagues mentioned that sometimes Republicans don't agree 
with Republicans and the Democrats don't agree with Democrats 
and the issues get a little blurred particularly in this area. 
But I am concerned about that.
    I am also concerned, Mr. Gruenspecht, you indicated in your 
testimony that the greenhouse gas standards for heavy duty 
trucks might impact RFS. Could you explain a little bit more on 
that?
    Mr. Gruenspecht. Well, the reason I mentioned that in the 
testimony or the reason that was included, we have heard a lot 
about what was expected, in 2007. And again, in 2007, there was 
an increase in more stringent fuel economy standards for light 
duty vehicles which wasn't reflected in that outlook that 
apparently people relied on even though they were changing the 
fuel economy standards.
    So all I am saying here is, we have present outlooks and 
they are based on current laws and regulations. Right now those 
Phase 2, so-called Phase 2 standards are not part of that 
although we are going to do a side case that looks at the 
proposed Phase 2 standards because they have already been 
proposed.
    But in that projection there would be significantly less 
diesel consumption than in the baseline projection, so we are 
not trying to guess what either the people in Congress are 
going to do or the people in the Administration are going to 
do. Since we know there is a specific proposal we feel like we 
can put that out there.
    But I guess I put that in the testimony not as a caution 
but just so if someone says, gee, we looked at your outlook and 
it said there would be this much diesel, it is very dependent 
on policy. Policy matters a lot.
    Mr. Griffith. And it is clear that you are trying to be 
very careful in your projections and so forth, but you did 
indicate that if the greenhouse gas standards for heavy duty 
trucks are finalized that would significantly reduce projected 
diesel fuel use----
    Mr. Gruenspecht. Exactly.
    Mr. Griffith [continuing]. And these things are going on, 
the lower cost of gasoline has had an impact and et cetera as 
you have mentioned previously in your testimony.
    And then it makes me wonder, Ms. McCabe, when you respond 
to Mr. Pompeo that you are confident that all these goals can 
be met, how can you be so confident when you have got all these 
different variable factors out there which you have already 
established in the past that you weren't able to meet all those 
goals?
    Ms. McCabe. Yes, there is a really important factor to 
mention here. Congress set absolute numbers in the statute, but 
then the way the obligation is actually given to the industry 
is through a percent. So because there are absolute numbers in 
the statute we need to be guided by absolute numbers.
    But then the expectation is not that any given producer 
will produce x number of exact gallons based on our absolute 
number but rather on the percentage, so we translate that to a 
percentage. So that means if we are wrong on we predict more 
gasoline use than actually happens or less gasoline use than 
actually happens, the refiner's obligation it will take that 
into account because it is a percent obligation.
    Mr. Griffith. Well, I appreciate that. I will ask you to 
give me information later because I don't expect you to have 
this, although some of the answers I thought the questions that 
were asked I thought you might have had answers in preparation 
for this hearing.
    But biodiesel that comes from grease as opposed to coming 
from plant material, if you can get me whatever it is you all 
are working on in that regard and how you might be increasing 
that or what proposals you may be making behind the scenes to 
increase the amount that is made from waste grease fats. I know 
there is some research out there and if Singapore is looking at 
it and other folks are looking at it to try to take our love of 
hamburgers and turn it into a renewable fuel source. So just 
give me that information later if you would.
    My time is running out and so I would also ask 
Administrator Gruenspecht, according to the U.S. Department of 
Energy vehicles will typically go three to four percent fewer 
miles per gallon on E10, four to five percent fewer on E15 than 
on a hundred percent gasoline. And according to the Institute 
of Energy Research, Americans have paid about 10 billion in 
additional cost for the privilege of having ethanol blended 
into their gasoline.
    Can you verify this information, and if it is correct why 
should Virginians in my region of the state continue to be 
forced to foot the bill in order to prop up the ethanol 
industry?
    Mr. Gruenspecht. I think the first set of information is 
probably correct, the lower energy content of ethanol. I am not 
sure the second set of information about how much it has cost 
is really open to a lot of interpretation. And the reason is, 
as many of the members have said, ethanol contributes octane 
which is very important to make gasoline good and that we would 
be, many people I guess, Administrator McCabe, myself, some of 
the members believe that we would be using a lot of ethanol in 
gasoline even if there were no RFS requirement.
    So again I am not sure how that 10 billion figure was 
calculated, but if it is providing other necessary parts of 
gasoline I don't know that you would necessarily call that a 
cost. So the first part yes, I think.
    Mr. Griffith. All right, I appreciate that and I yield 
back.
    Mr. Whitfield. The gentleman's time has expired. At this 
time the chair recognizes the gentleman from Illinois, Mr. 
Kinzinger, for 5 minutes.
    Mr. Kinzinger. Thank you, Mr. Chairman. And before I begin 
my questions I am going to ask unanimous consent to insert into 
the record a study that shows, showing the impact of the EPA's 
lack of certainty on the biofuels industry titled, ``Estimating 
Another Year of Chilled Investment in Advanced Biofuels Due to 
RFS Uncertainty.''
    Mr. Whitfield. Without objection.
    [The information appears at the conclusion of the hearing.]
    Mr. Kinzinger. To the administrator, thank you for your 
service and thank you for being here. I really appreciate it. I 
just have a couple of questions. I am curious how the EPA 
determined the biodiesel targets for 2017 and the proposed 
targets for 2018. It is my understanding that these targets 
will both be below the amount of biodiesel EPA estimates will 
be produced this year. Can you elaborate on how they were 
determined?
    Ms. McCabe. Sure, happy to do that and to follow up if I am 
not detailed enough for you. So the statute establishes an 
amount for biodiesel through 2012, gets up to one billion 
gallons and then it is up to the EPA to determine an amount 
after that. So what we do with biodiesel is what we do with all 
of the fuel categories which is we get as much information as 
we can about what the expectations are with respect to the 
industry.
    But there is a difference with biodiesel because biodiesel 
is one of a number of advanced fuels. It fits into that 
advanced category and we have to set a separate amount, 
expected amount for the advanced category. And one of the 
questions is how much of that advanced category should 
biodiesel basically get a guarantee on? And we believe that it 
is important to have competition and choice and opportunity for 
a variety of fuels to compete.
    So we consider very carefully how much biodiesel can 
contribute because it is very important, right, but also 
leaving room for other fuels to compete. Now it is not a limit 
on how much biodiesel can be produced nor sold, and depending 
on what other fuels are out there and how they are priced it 
can be very competitive. But in fact it has provided a 
substantial amount of our advanced biofuel.
    So that is the process we go through. We look at the 
information, but then we have this other consideration to make 
sure that other fuels have an opportunity to compete.
    Mr. Kinzinger. OK. And I am sure you appreciate the amount 
of planning that goes into this infrastructure, purchases by 
obligated parties or preparation made by the ag community which 
comes along with complying with the annual volumes. I am glad 
the EPA is working to get back on schedule with the 2017 rule 
deadlines.
    What are you as an agency doing to ensure that you will 
remain on schedule for 2017 and beyond?
    Ms. McCabe. Yes. I think we have done a good job of getting 
ourselves back on track. The big issue was approaching the 
blend wall, the use of the general waiver. We have now used it. 
We have proposed to use it again. It is being litigated as has 
been mentioned, so presumably will get some direction from a 
court at some point.
    So some of those very difficult issues are behind us now 
and so we are able to do our routine work, just make sure that 
we are on schedule. We got this proposal out absolutely on time 
to get a final out by November and there is no reason we 
shouldn't make that.
    Mr. Kinzinger. So your feeling is that basically from here 
on out we are probably going to be on track better with timing?
    Ms. McCabe. Well, that is my belief. I won't speak for 
future EPA leadership, but I feel confident that the program 
can do it.
    Mr. Kinzinger. OK, thank you. And just in closing to just 
remind people because there is obviously a lot of talk and it 
is important, and I have a lot of, a hugely agricultural 
district and I remember back in the '90s there was a lot of 
talk about whether the family farmer would be able to survive. 
And is this just going to become in essence major corporations 
taking over these farms to do it?
    And I think ethanol has been a big part of the survival of 
the family farmer and obviously very important going forward, 
especially when we see corn prices today and knowing that the 
importance of producing food not just for ourselves but for 
frankly the world and the importance of it. So again, thank you 
for your service and thank you both for being here, and I will 
happily yield back.
    Mr. Whitfield. The gentleman yields back. At this time the 
chair recognizes the gentleman from Texas, Mr. Flores, for 5 
minutes.
    Mr. Flores. Thank you, Mr. Chairman. I thank the witnesses 
for joining us today.
    Mr. Gruenspecht, do you believe that the market can absorb 
14 \1/2\ billion gallons of renewable fuels in the 2016 RVO? I 
am talking gasoline only for all of my conversation.
    Mr. Gruenspecht. Yes, I am an economist and I tend to 
believe in markets. And I think that there are certainly 
conditions I could imagine that the market can absorb that.
    Mr. Flores. OK.
    Mr. Gruenspecht. I don't know what the RIN prices would be. 
At some point, the higher ethanol blends get very attractive to 
the people who can use them, so I would not rule out anything.
    Mr. Flores. OK. How about the 14.8 billion gallons for the 
2017 RVO?
    Mr. Gruenspecht. Again it is a market-based issue.
    Mr. Flores. OK, but it could generate a higher RIN cost 
which would generate higher gasoline costs?
    Mr. Gruenspecht. Well, again the figuring out--yes, it 
could generate higher RIN costs. Exactly who bears those costs 
is a very complex----
    Mr. Flores. OK. So I guess that leads to the broader 
question. What happens to the market if either the 2007 statute 
and/or the EPA continue to push higher and higher volumes of 
ethanol into a fuel market, a gasoline market where volumes 
have flattened and are actually you are predicting to decline? 
What happens to the market?
    Mr. Gruenspecht. If I knew the answer to that question I 
guess I wouldn't be a government official.
    Mr. Flores. There you go.
    Mr. Gruenspecht. But seriously, there are actually, I did 
try in the written testimony, although I didn't mention it in 
the oral, there are options, higher volume blends which has all 
kinds of issues related to infrastructure that I actually feel 
like the members here are extremely well informed on this 
issue, probably better informed than I am to be the truth.
    But the opportunity for something like biobutanol, say, 
which potentially could be blended at a high--there is no rule 
that says that the biofuel has to be ethanol and biodiesel. 
There are processes to create biobutanol using the same 
feedstocks, so there are a lot of different options. I am not 
going to say it is a cinch. I am not going to say it is, but 
if----
    Mr. Flores. But it could cause market disruption, do you 
think?
    Mr. Gruenspecht. It would definitely change things.
    Mr. Flores. Exactly.
    Mr. Gruenspecht. It might change the blendstocks that have 
to be used in conjunction.
    Mr. Flores. Let me move on though, we have got a lot of 
ground to cover in a short period of time.
    Ms. McCabe, you and I both understand the EPA has got some 
waiver authority to adjust the volumes, also I think you have 
essentially admitted that the mandated volumes don't match the 
trends in consumer fuel demand. And so I believe that means 
that they are technically and commercially unachievable and I 
think that is what the 2017 proposal or the rulemaking by the 
EPA essentially says is that the statutes can't be achieved so 
we the EPA are going to do the best we can in an uncomfortable 
situation.
    So that leads me to the next question. Congress said 
volumes. Would it be easier for you if Congress had just said 
we set percentages of renewable fuels that have to be blended 
based on actual gasoline demand? Wouldn't that have been a 
better solution?
    Ms. McCabe. Well, as you might expect I am not going to 
opine on what Congress, whether one thing or another would have 
been better for Congress to do.
    Mr. Flores. But you have to implement these things. Would 
it have been easier for you to implement if you had a 
percentage mandate instead of a volumetric mandate?
    Ms. McCabe. Well, I think we would, Congressman, go through 
much of the same inquiry to make sure that whether it is 
expressed as a percentage to begin with or whether it is an 
actual volume that then is translated to a percentage, we would 
still be inquiring into where the industry is going and what is 
feasible and realistic. So, and I think we would be doing a lot 
of the same work.
    Mr. Flores. OK. Wouldn't though, let's put it this way. 
Right now every year, everybody involved in the gasoline market 
if you will, whether it is a consumer, a refiner, a corn 
grower, an advanced ethanol company, goes through an extreme 
amount of uncertainty because they just don't know what the EPA 
is going to do, because they know there is a statute out there 
that is volumetrically driven that cannot be achieved through 
the current technology and current market conditions.
    So wouldn't it be better and more stable for the market if 
there was an easily understood percentage mandate instead of a 
volumetric mandate?
    Ms. McCabe. Well, I think uncertainty has been a real 
concern of people and that is why it is so important for us to 
get our rules out on time. But even if we get them out on time 
it is an annual process, right. So people have those concerns.
    Mr. Flores. Let me say this. I think the market would 
respond better just knowing, OK, expected gasoline demand is x 
and the percentage is y and therefore the outcome that the 
market has to be driven toward is z. That is a lot simpler. 
There is a lot more stability and a lot more transparency to 
the market. Thank you. I have overstayed my welcome. I yield 
back.
    Mr. Whitfield. The gentleman yields back. At this time the 
chair recognizes the gentleman from Mississippi, Mr. Harper, 
for 5 minutes.
    Mr. Harper. Thank you, Mr. Chairman.
    Ms. McCabe, at a Senate hearing earlier this year you 
indicated that the EPA in consultation with the DOE has 
continued to grant small refinery hardship waivers. For those 
that were denied was the denial based on their profitability, 
and has DOE and EPA implemented a new hardship standard by 
which you are denying hardship relief to refineries that remain 
profitable even if they have a disproportionate regulatory 
burden by producing more diesel than the national average and 
lower refining margins?
    Ms. McCabe. We do continue to look at hardship waivers and 
we have a pretty standard number of them every year and we 
coordinate closely with the DOE. We worked with the DOE and the 
DOE developed an evaluative process that they use to then give 
us a recommendation and they used a couple of different 
factors. As you know, DOE has recently made some adjustments in 
their process based on some recommendation language that they 
got through legislation directed to them. We continue to 
coordinate with the DOE, but we however feel that our job is to 
implement the statute and to exercise our hardship waiver 
authority in conjunction with the statute. So we take DOE's 
input but we have not made changes in our process that are 
consistent with the DOE changes that they have made in response 
to direction that they got.
    Mr. Harper. Well, I am not sure I really got an answer to 
my question. Is profitability a factor in approving or denying 
a hardship petition?
    Ms. McCabe. Yes, it is. There are a number of economic 
factors. It is one of a number of factors.
    Mr. Harper. So their profitability is a factor. So you 
could have two entities doing the same amount of work but one 
is not profitable, the other one is for whatever reason it is, 
and the hardship waiver may be granted to the refinery that is 
financially not as viable or as profitable, and the one that 
may be doing it right and more profitable is going to get 
denied under the same set of circumstances.
    Ms. McCabe. These are really complicated decisions, 
Congressman, and they are----
    Mr. Harper. Well, it is pretty complicated when you are 
being punished for trying to do it right and denied this in 
this regard.
    Ms. McCabe. Well, Congressman, when somebody comes and asks 
for an exemption that means that they are asking to not be 
expected to do what the rest of the industry is asked to do. 
And so we look at these very, very carefully, because it 
matters greatly to the person coming to us but it also matters 
greatly to everybody else that has that burden. And that is why 
we think that the range of factors we have established are 
appropriate ones.
    Mr. Harper. And I know you have mentioned it and I would 
maybe not agree with you that they are appropriate and maybe 
need to be looked at closer, and you have mentioned the 
language included in the Omnibus Appropriations bill last year 
restating congressional intent regarding small refiner 
hardship. Can you please tell me how the EPA intends to apply 
to small refiner hardship petitions going forward?
    Ms. McCabe. That language was directed towards DOE's 
process and how they would make their recommendations to the 
EPA. And so they are doing that and we are paying attention to 
DOE's recommendations as we always do and to the analysis that 
goes into their ultimate recommendations. We are making our 
decisions based on our understanding of what our statutory 
obligations are.
    Mr. Harper. For hardship petitions that are submitted this 
year will you follow the 90-day time clock for a response?
    Ms. McCabe. Yes.
    Mr. Harper. OK. Mr. Chairman, I don't believe I will have 
enough time to get into another question here, so I will yield 
back.
    Mr. Whitfield. The gentleman yields back. At this time the 
chair recognizes the gentleman from Oklahoma, Mr. Mullin, for 5 
minutes.
    Mr. Mullin. Thank you, Mr. Chairman. And thank you for 
taking the time to be here. So I am going to focus on a couple 
of things real quick since you are the economist on the panel 
today. With the RIN's price what is the current price today on 
the RINs, do you know?
    Mr. Gruenspecht. I probably have it written down somewhere.
    Mr. Mullin. 85 cents.
    Mr. Gruenspecht. Sounds right.
    Mr. Mullin. OK. And before the blend wall do you know what 
the RIN's price was?
    Mr. Gruenspecht. I know that for a long, long time the RFS 
wasn't binding at all. We were using much, much more ethanol 
than required by the RFS and the RIN prices were----
    Mr. Mullin. Right. Before the blend wall it was like 
trading between 2 and 4 cents. At its highest point it was 
costing 1.48. Do you know what the total was going to the 
refineries, what the refineries were spending on this?
    Mr. Gruenspecht. I am not sure. The blenders were buying 
ethanol----
    Mr. Mullin. But the refineries were forced to buy them even 
though----
    Mr. Gruenspecht. Right.
    Mr. Mullin [continuing]. This blend was out of their 
control.
    Mr. Gruenspecht. Right.
    Mr. Mullin. Do you know how much the refineries were 
costing them?
    Mr. Gruenspecht. I am not sure because when they bought 
ethanol it had RINs attached, so the question is how much----
    Mr. Mullin. How much does it--OK, let me rephrase this 
then. How much is the RINs costing the consumer out there? How 
much is it adding to a gallon of gas?
    Mr. Gruenspecht. I am actually not sure I know the answer 
to that question, honestly. It is a tricky question because----
    Mr. Mullin. Well, it is but you are the economist.
    Mr. Gruenspecht. I understand that.
    Mr. Mullin. And so that is why I am asking you the question 
because this is part of the debate. Is this healthy for the 
consumer? If ethanol is a cheaper, better, smarter way to move 
forward we are talking today about what is the percentage of 
the blend, what is it required, and then the bigger picture is 
what is it actually costing the consumer? We already know that 
as a guy that has over a hundred vehicles on the road in my 
company and that we have multiple small engines out there--we 
are in the construction business--we know it is not healthy for 
our vehicles. I don't think either side is even debating that.
    So if it is not healthy for our vehicles we are wanting 
someone to tell us, where is it good? Is it good for the 
economy?
    Mr. Gruenspecht. I have not looked at that sir.
    Mr. Mullin. So----
    Mr. Gruenspecht. A challenge as we discussed earlier is 
that the ethanol serves multiple purposes in the fuel, so it 
adds octane, it helps meet other kinds of requirements 
unrelated to the RFS.
    Mr. Mullin. But are they the smarter, better way to move 
forward? I mean for the economy, you are an economist.
    Mr. Gruenspecht. Yes.
    Mr. Mullin. Is it healthy for the economy?
    Mr. Gruenspecht. I am actually not sure it is a primary 
consideration for the economy. It is more of a consideration 
for fuels policy and environmental policy. There are definitely 
effects.
    Mr. Mullin. Well, for the environmental policy----
    Mr. Gruenspecht. I think it affects the agricultural 
community to some extent. I mean----
    Mr. Mullin. Well, sir, for the environmentalist, let's just 
talk about that. I think you said it was higher fuel standards; 
is that what you said earlier? You were answering a question 
and you spoke about higher fuel standards. And so let's talk 
about the environment. Ethanol doesn't burn better. I get less 
miles per gallon in my vehicles when we burn ethanol.
    Mr. Gruenspecht. Absolutely. Ethanol has less energy 
content than gasoline.
    Mr. Mullin. On our vehicles we run about 150 vehicles of 
one particular brand. When I run non-ethanol versus ethanol I 
see roughly a 12 percent increase in fuel mileage, when I run 
100 percent fuel E0. And so for the environment that is not 
good, so I focus once again on the economy side of things. 
Where is it good?
    And I don't mean to be pinning you, but you are the 
economist and I find it funny that we can't get an answer on 
that; that no one has studied downstream. Because we always 
talk about the consumer, we always talk about the middle class, 
we always talk about how much better and healthier it is for 
them and lower fuel standards, but I am just not seeing it.
    Mr. Gruenspecht. All right. Again it is something we could 
look at. I think there are a variety of views on it, a variety 
of perspectives on it.
    Mr. Mullin. So the EPA has never looked at this?
    Mr. Gruenspecht. Well, I can't speak for the EPA.
    Mr. Mullin. Ma'am?
    Mr. Gruenspecht. That sounds like throwing my colleague 
under the bus, but----
    Mr. Mullin. But you think some economists should be looking 
at this?
    Ms. McCabe. Yes, we have economists at EPA as well who look 
at these issues. A couple things I will say in response to the 
points that you have made, there has been development in rural 
America as a result of the investment in not just ethanol but 
other renewable fuel operations, and I am sure you will hear 
that from the second panel to a great degree. So it has added 
to the economy in that way.
    Mr. Mullin. What has it added to other than higher consumer 
prices?
    Ms. McCabe. Well, it has created jobs and----
    Mr. Mullin. At the cost of who, the consumer. We have 
created jobs through regulation.
    Ms. McCabe. Well, so another point that I want to be sure 
to make is that a lot of people have looked at and are looking 
at the dynamics of the RIN price and does it or doesn't it 
affect prices at the pump for the consumer. And----
    Mr. Mullin. It has to, because it has cost the refineries 
billions of dollars and who do they pass it on to? As a 
business owner I have got to pass my regulation costs to 
someone. You can't absorb it. That is why I find it odd that we 
through either economists or the EPA haven't looked at this 
downstream on actually what it is costing the consumer at the 
pump.
    Ms. McCabe. We actually have looked at this issue in great 
detail and would be glad to follow up with you and provide some 
more information on it.
    Mr. Mullin. Please do, I would appreciate that. Thank you 
so much.
    Mr. Whitfield. The gentleman's time has expired. At this 
time the chair will recognize the gentleman from Ohio, Mr. 
Johnson, for 5 minutes.
    Mr. Johnson. Thank you, Mr. Chairman. And I appreciate the 
panel for joining us today. Ms. McCabe, how might the EPA go 
about setting blending requirements differently after 2022, 
fully understanding that a different President and 
Administration will be in place at that time?
    Ms. McCabe. Yes, sir. Well, thank you for recognizing that 
I won't speak for a future EPA. But we would use the guidance 
that Congress gave us in the statute. So our job is to look at 
the list of considerations and concerns that are laid out in 
the statute which are very explicit. We are to look at the 
implementation of the program through 2022 and take that into 
account, and we are to also make sure that we set minimum 
requirements for advanced fuel that are no less than the last 
level that we set in 2022, and likewise for biodiesel. And so 
those are two specific directions that Congress gave us, and 
beyond that we would use our consideration of the list of 
factors.
    Mr. Johnson. Do you anticipate any immediate or significant 
changes to blending requirements once the EPA is not bound by 
these statutory requirements?
    Ms. McCabe. That is something I really can't speak to. It 
is not only would it not be me, it is many years into the 
future.
    Mr. Johnson. OK. Do you believe that the agency is on track 
to meet all statutory blending requirements by 2022?
    Ms. McCabe. I think we have made clear that the statutory 
volumes that Congress put, the actual numbers that Congress put 
into the statute we will not be able to make, and so that is 
why we have used our waiver authority in this proposed rule and 
the last one to set standards that are less than that.
    Mr. Johnson. So if you can't meet the statutory blending 
requirements by 2022, then how many more years might the agency 
need to achieve those blending requirements, any idea?
    Ms. McCabe. The actual numbers in the statute?
    Mr. Johnson. Yes.
    Ms. McCabe. I really wouldn't know.
    Mr. Johnson. I mean, if you know you are not going to meet 
them have you not looked at how long it would take you to meet 
them?
    Ms. McCabe. I don't believe we have looked at that, 
Congressman, because we know that there is a process for us to 
set appropriate but aggressive standards in the meantime. We 
know that there is a process in the statute for what happens 
afterwards and that would, I expect, be the intent of the 
agency would be to follow that process.
    Mr. Johnson. It seems to me that because these are 
statutory requirements that the agency would be planning to 
meet the statutory requirements, and if not, at least inform 
Congress as to when they expected to be able to meet them. But 
you say you haven't looked at that.
    Ms. McCabe. Well, if Congress asks us that specific 
question we would do our best to answer it. I can tell you that 
the expectation for 2017, which is the proposal we have out 
now, I believe is a total volume of 24 billion gallons and our 
proposal is 18. So that is the delta on the total.
    Mr. Johnson. OK. One final question, Ms. McCabe. EPA's CAFE 
and GHG standards came out after the RFS was last revised. 
Explain how this program changes compliance with the RFS.
    Ms. McCabe. Yes, sir. That is a good question and it is 
actually one that has been present in a lot of these questions 
today. I mentioned a few minutes ago that the way the statute 
works is it starts from absolute numbers, but then the actual 
obligation for the obligated party is converted into a percent. 
And what that means is that the obligation can be sensitive to 
increases or decreases in fuel use.
    So you have noted that there are programs in place now that 
we didn't have before that require increased fuel economy that 
could well lead to less fuel being used overall, maybe not for 
some of the reasons that Howard mentioned, but whether it is 
higher or lower the percentage obligation for each obligated 
party will be able to adjust.
    Mr. Johnson. OK, all right. Mr. Chairman, I don't have time 
for another question either, so I yield back.
    Mr. Whitfield. The gentleman yields back. And that 
concludes all of the questions for the first panel. So Ms. 
McCabe and Mr. Gruenspecht, thank you very much for being with 
us and you are dismissed.
    At this time I would like to call up the second panel of 
witnesses. And you all take a seat and we will just introduce 
each of the witnesses as we call on them to give their opening 
statement.
    OK, our first witness on the second panel will be Mr. Chet 
Thompson, who is the President of the American Fuel and 
Petrochemical Manufacturers. And all of you are experienced 
witnesses, but I would just remind you to pull the microphone 
up and make sure the microphone is on. And when the red light 
goes on that means your time is up, but we will give you a few 
minutes to wind up.
    So Mr. Thompson, thanks very much for being with us this 
morning. We look forward to your testimony, and you are 
recognized for 5 minutes.

   STATEMENTS OF CHET THOMPSON, PRESIDENT, AMERICAN FUEL AND 
 PETROCHEMICAL MANUFACTURERS; BOB DINNEEN, PRESIDENT AND CEO, 
     RENEWABLE FUELS ASSOCIATION; TODD J. TESKE, CHAIRMAN, 
   PRESIDENT, AND CEO, BRIGGS & STRATTON CORPORATION; BROOKE 
    COLEMAN, EXECUTIVE DIRECTOR, ADVANCED BIOFUELS BUSINESS 
 COUNCIL; COLLIN O'MARA, PRESIDENT AND CEO, NATIONAL WILDLIFE 
 FEDERATION; ANNE STECKEL, VICE PRESIDENT OF FEDERAL AFFAIRS, 
 NATIONAL BIODIESEL BOARD; AND TIM COLUMBUS, GENERAL COUNSEL, 
   NATIONAL ASSOCIATION OF CONVENIENCE STORES AND SOCIETY OF 
           INDEPENDENT GASOLINE MARKETERS OF AMERICA

                   STATEMENT OF CHET THOMPSON

    Mr. Thompson. Thank you, Chairman. I appreciate the 
opportunity to be here. To all the members of the subcommittee, 
again my name is Chet Thompson and I am the president of the 
American Fuel and Petrochemical Manufacturers. AFPM represents 
the domestic petroleum refining sector. Our members account for 
98 percent of the capacity of the refining industry which 
transforms crude oil into the many fuels and products that 
Americans rely on for their everyday life. Unlike others on the 
panel, our members are obligated parties under the RFS, which 
means we are the ones left holding the bag if this program is 
not properly implemented.
    I would like to use my limited time just to touch on the 
key points we made in our written testimony. First, the RFS is 
irreparably broken and needs to be repealed. After more than a 
decade of implementations, it is clear to almost everyone but 
our friends in the biofuel industry that the RFS program is not 
working as Congress intended, and that the two purposes cited 
by Congress for establishing the program--energy security and 
emission reductions--are either no longer an issue and are not 
being addressed by the program or in fact being made worse by 
the program.
    The United States is more energy secure now than ever 
before, and indeed we are the world's largest producer of oil 
and natural gas. And according to EIA--you heard it this 
morning--the RFS has played only a small part in this 
transformation.
    Mr. Whitfield. Mr. Thompson, would you pull the microphone 
a little bit closer? We are having a little bit of difficulty 
hearing.
    Mr. Thompson. Not enough rope here, I will move closer. And 
so as I was saying, the RFS has played only a small part in 
this transformation in making us more energy secure. And the 
notion that the RFS program is better for the environment is at 
best debatable, and many including the National Academy of 
Sciences believe the RFS may in fact be a negative to the 
environment. The time has come for Congress to repeal the RFS 
and let the biofuels industry stand or fall on its own like all 
the other industries in this country.
    Second and importantly, AFPM, we are not anti-biofuel. To 
the contrary. Several of our members are large ethanol and 
biofuel producers. We believe biofuels play an important role 
in the U.S. fuel supply and will continue to do so even when 
this body repeals the RFS. What we are however is anti-
government mandates.
    Third, as to last year's standards and this year's 
proposal, we support EPA's acknowledgment that the ethanol 
blend wall is real and that we also support their decision to 
use their general waiver authority to adjust the standards 
accordingly. That said, we do not believe that EPA has gone far 
enough to ensure the annual standards are in fact reasonably 
achievable.
    The RFS requires increasing volumes of biofuel to be 
squeezed into an inadequate biofuel infrastructure and a 
decreasing demand for transportation fuel and also confronts a 
fact that consumers' demand for these programs, or these fuels 
are just nonexistent.
    This is what gives rise to the blend wall, and as EPA has 
repeatedly recognized, only a tiny fraction of the fuel 
distribution and retail infrastructure is designed to 
accommodate fuels containing more than 10 percent ethanol. 
Moreover, the vast majority of cars on the road today are not 
warrantied to handle more than E10 and nor are the small 
engines equipped to handle these blended fuels. Demand is much 
lower--again we heard this from EIA--today than Congress 
thought when they enacted the program. Projections for 2007 are 
down by more than 10 percent and projections for 2022 use has 
dropped by more than 23 percent.
    To overcome this and meet its aggressive 2017 proposals, 
EPA would eliminate in 1 year starting 6 months from now their 
proposal would eliminate 96 percent of the ethanol-free 
gasoline or E0, taking it from 5.3 billion gallons down to just 
200 million. It would also require consumers to purchase 
record-breaking volumes of E85, E15, and biodiesel, ignoring 
the very obstacles they acknowledge in the rulemaking still 
exist today. If biofuel production so far this year is any 
indication, EPA's proposed standards are indeed unachievable.
    As the former deputy general counsel of EPA, I would be 
remiss not to mention that the Clean Air Act clearly provides 
EPA with the authority to adjust annual standards to account 
for the E10 blend wall. The biofuel industry's challenge to 
this authority is simply without merit.
    Finally, AFPM strongly supports H.R. 5180, the Food and 
Fuel Consumer Protection Act of 2016. While certainly we would 
prefer full repeal of this program, the Association fully 
supports H.R. 5180 introduced by Congressman Flores and Welch 
and cosponsored now by ten members of the subcommittee. This 
legislation would prevent EPA from forcing more ethanol into 
the fuel market than it can handle, which in turn would provide 
at least some stability in the RIN market and preserve some 
consumer choice for ethanol-free gasoline. This legislation 
importantly represents a good faith compromise on our part that 
deserves the support of every member of Congress. Thank you, 
and I look forward to answering your questions.
    [The prepared statement of Chet Thompson follows:]
    [GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Whitfield. And thank you, Mr. Thompson. And our next 
witness is Mr. Bob Dinneen who is the President and CEO of the 
Renewable Fuels Association. Welcome, Mr. Dinneen, and you are 
recognized for 5 minutes.

                    STATEMENT OF BOB DINNEEN

    Mr. Dinneen. Thank you, Mr. Chairman. Good afternoon, 
members of the committee. I must confess I am feeling a little 
bit nostalgic this morning reflecting on the many times I have 
testified in this room on this very subject going back to 2002, 
as the committee wrestled with how best to accommodate oil 
companies looking to eliminate the requirement to use MTBE, a 
petroleum-based additive contaminating drinking water across 
the country. The result was the first RFS supported by the oil 
industry and a bipartisan majority here.
    The success of that bill gave rise to the expanded RFS in 
2007, creating the very first carbon metric for liquid fuels. 
RFS2 was transformative legislation and it is accomplishing 
everything it was asked to do. It was intended to stimulate 
investment and expansion of conventional ethanol--done. U.S. 
ethanol producers met the challenge and we now have the 
capacity to produce more than 15 \1/2\ billion gallons 
annually. It was intended to create a value-added market for 
farmers--done. Ethanol has created a robust ag economy that 
importantly allowed Congress to reduce farm program costs 
saving taxpayers money.
    It was intended to provide competition at the pump--done. 
Ethanol is the lowest cost octane on the planet and because it 
is cheaper than gasoline has reduced petroleum demand and 
extended the barrel. It has significantly reduced consumer 
prices. It was intended to enhance energy security--done. U.S. 
oil dependence has plummeted in part because of fracking, but 
most certainly also because of ethanol. Indeed, gasoline 
imports have virtually been eliminated in direct response to 
the RFS.
    It was intended to reduce carbon--done. Ethanol produced 
today reduces greenhouse gas emissions 34 percent relative to 
gasoline, and ethanol from tomorrow's cellulosic feedstocks 
will do even better making the RFS the single most effective 
transportation related carbon policy in the world. It was 
intended to stimulate investment in advanced biofuels--doing. 
While the inexorable march towards cellulosic ethanol was 
interrupted by the worldwide recession and banking crisis 
precipitated by $140 a barrel oil in 2008, these technologies 
are now rolling out and the promise of advanced biofuel 
technology is being realized.
    So what has changed from when the RFS passed with such 
broad enthusiasm? Some have said, well, the RFS is driving up 
food costs. No, the price of corn today is about where it was 
in 2007. Retail food price inflation has actually been 
demonstrably lower since the RFS2 was passed, and as the World 
Bank reported again just last week, demand for ethanol has not 
had a meaningful impact on world food prices. Rather, the price 
of food is far more related to the price of oil.
    Refiners will say we are producing more crude oil 
domestically and the RFS is just an anachronism of our energy 
scarcity past. Well, we have been reminded lately of the boom 
and bust cycle that is oil extraction as the rig count has 
plummeted. 80,000 workers were laid off and fracking operations 
in the Bakken have shuttered, leaving communities holding the 
lost hope of economic opportunity. Faced with the same falling 
oil prices, U.S. ethanol producers added 2,000 jobs last year, 
invested in new technologies, and worked to build new markets 
here and abroad. Tell me what has been better for America.
    Some, including EPA, have said we have hit a blend wall. We 
can't blend any more than 9.7 percent of the gasoline market. 
There aren't enough cars that can run on more than ten percent, 
and boats and small engines will be harmed if forced to use the 
higher ethanol blends. Hogwash. There is nothing magical about 
9.7 percent. Twenty seven states today already use more, 23 
states use more than ten percent, and Minnesota uses 12.2 
percent all because of the increasing demand for E15 and E85.
    Today, more than 25 percent of the vehicles on the road are 
fully warrantied for E15 or higher. Eighty percent of the new 
cars produced last year were warrantied for E15. For 
comparison, just 11 percent of the cars on the road today 
require premium. You can find premium every place, so what is 
the big challenge about providing that E15 fuel for those 
consumers that want it and can use it?
    That said, there is no mandate for E15. Even API says E0 is 
on the rise and E10 will remain the ubiquitous fuel option. The 
pumps selling E15 will be clearly labeled. There is no reason 
to believe folks needing E10 or less for their small engines, 
boats, or motorcycles will be unable to find it.
    Now the only thing that has changed is the incumbent 
industry is fiercely trying to relitigate the legislative 
battle it lost a decade ago. But the policy objectives, energy, 
economic, and environmental security have not subsided. Indeed, 
they have become even more critical as the planet warms, 
consumers struggle, and OPEC flexes its muscle.
    This committee wrote a great law in 2005. You gave EPA very 
clear guidance on how to implement the program and the 
flexibility to deal with issues. There is nothing wrong with 
the RFS that cannot be fixed with what is right with the RFS. 
There is no need to legislate changes to a program that is 
working. EPA needs to implement the program as you wrote it, 
and the full potential of the program will be realized. Don't 
be bullied by an incumbent industry intent on recapturing lost 
market share and preventing a more sustainable energy future. 
Celebrate as I do the success of this program. Thank you, Mr. 
Chairman.
    [The prepared statement of Bob Dinneen follows:]
    [[GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Whitfield. Thank you, Mr. Dinneen. And our next witness 
is Mr. Todd Teske, who is the Chairman, President, and CEO of 
Briggs & Stratton Corporation. Welcome, Mr. Teske, and you are 
recognized for 5 minutes.

                   STATEMENT OF TODD J. TESKE

    Mr. Teske. Chairman Whitfield, Vice Chairman Olson, Ranking 
Member Rush, and distinguished members of the committee, thank 
you again for inviting me to offer Briggs & Stratton's 
perspective on the EPA's implementation of the Renewable Fuel 
Standard. I have been extremely impressed by the committee's 
workman-like approach to educate itself and the public on the 
challenges of the RFS that it presents to manufacturers, 
consumers, and the environment.
    The Outdoor Power Equipment Institute on which I currently 
serve as a board member has previously submitted formal 
comments in response to the committee's white papers issued in 
2013. My statement today which is submitted strictly in my 
capacity as chairman, president, and CEO of Briggs & Stratton 
will attempt to define the RFS challenges as they pertain to 
small engine manufacturers, and offer suggestions on how to 
protect consumers from significant economic and environmental 
damage.
    Briggs & Stratton, headquartered in Milwaukee, Wisconsin, 
is the world's largest producer of gasoline engines for outdoor 
power equipment. We are a leading designer, manufacturer, and 
marketer of power generation, lawn and garden, turf care, and 
job site products through its Briggs & Stratton, Simplicity, 
Snapper, Snapper Pro, Ferris, PowerBoss, Allmand, Billy Goat, 
Murray, Branco, and Victa brands.
    Briggs & Stratton products are designed, manufactured, 
marketed, and serviced in over a hundred countries on six 
continents by 6,200 employees. Approximately 5,300 of those 
employees work here in the U.S. As a U.S.-based manufacturer, 
our company is proud to be celebrating its 108th anniversary 
this year, and continues to manufacture over 85 percent of its 
products in America.
    Let me first state that Briggs & Stratton has tremendous 
respect for EPA's career employees. Our engineers and their 
engineers collaborate on complex emission standard-setting 
rulemakings, and we have found them to be fair and objective in 
their effort to reach the right balance between environmental 
protection and economic reality.
    Achieving that balance is essential to Briggs & Stratton's 
over 5,000 employees in our Kentucky, Georgia, New York, 
Wisconsin, Alabama, Nebraska, and Missouri manufacturing 
facilities and the communities whose economies depend on the 
revenue generated from those plants.
    As is the case with manufacturers of every internal 
combustion engine, our facilities are carefully designed to 
produce small engines and outdoor power equipment that is 
designed, warranted, and EPA approved and certified to operate 
on gasoline containing not more than ten percent ethanol.
    It is for this reason that we are so deeply concerned about 
EPA's conditional certification of E15, a fuel which would 
produce severe engine damage if used in our small engine 
powered products. The partial certification of E15 is not 
satisfying the industry's current RFS targets. This ensuing 
process of revising ethanol fuel standards has and will 
continue to create uncertainty in the marketplace for 
manufacturers and increased misfueling risk to consumers. 
Misfueling will result in economic harm to all parties as 
engine's failures are met with voided product warranties and 
changes in brand loyalties. These changing targets will result 
in inefficient use of manufacturing resources and more 
expensive products.
    Following are five factors why we believe that the EPA 
should revisit the conditional certification of E15. One, 
research has shown and EPA has agreed that use of E15 in small 
non-road engines can have harmful and costly consequences on 
small engines and outdoor power equipment. Two, research on 
warning label effectiveness suggest that an E15 warning label 
will do very little to mitigate misfueling. Three, behavioral 
studies of customers at the gas pump conclude that consumers 
overwhelmingly favor the lowest price option regardless of the 
consequences. Four, misfueling due to a lack of education of 
consumers regarding the proper use of E15 will be significant. 
And five, the use of biofuels or, quote, drop-in fuels, has 
been tested and could prevent misfueling.
    If public policy requires that the federal government drive 
the market for alternative fuels, Briggs & Stratton urges that 
the policy be amended to more fully support the development and 
use of biofuels for many feedstock which are intended to be 
used as drop-in fuels. Drop-in fuels by definition meet 
existing gasoline specifications and are ready to drop in to 
infrastructure minimizing compatibility issues. These fuels are 
capable of satisfying the additional growth of biofuel use 
while also providing a safe and highly performing general fuel 
for both legacy and newly manufactured small engines and 
outdoor power equipment.
    At our expense we conducted extensive testing with a drop-
in isobutanol blended gasoline which demonstrated evidence that 
such fuels can provide the performance and operational criteria 
necessary to remain in compliance with EPA's emission standards 
without demonstrating any negative effects. It is unfortunate 
that the production of RFS-compliant drop-in fuels has 
struggled to reach commercial scale. I suspect that this is a 
factor in EPA's decision to grant the partial waiver to meet 
the statutory requirements using ethanol.
    In closing, I would like to note that for the past several 
years we have worked closely with our Congressman, Jim 
Sensenbrenner, in an effort to rescind the recertification of 
E15 until such time as the National Academy of Sciences can 
convene a peer review panel to evaluate EPA's action and 
recommend alternative approaches which protect consumers and 
the environment.
    This bill along with several others, including the bill 
introduced by Congressman Flores and Congressman Welch, serve 
to offer a variety of options for this committee to work with. 
I wanted to publicly thank these members of Congress for their 
work and for their dedication to finding creative, common sense 
solutions to the problems with the RFS. Briggs & Stratton urges 
this committee to work in a bipartisan bicameral manner to pass 
reform legislation through revisions to the RFS which will 
align domestic goals for biofuel use with the market's ability 
to produce, distribute, and consume such fuels.
    At a minimum we recommend that the reform legislation 
rescind the partial waiver for E15 and establish gasoline 
blended with up to ten percent ethanol as the general purpose 
domestic fuel. The legislation should also require that all 
considerations to increase domestic biofuel levels in the 
future be subject to a formal EPA rulemaking whereby the 
market's ability to safely distribute, retail, and consume such 
fuel is provided.
    Thank you once again for holding a hearing on this 
important issue and for allowing me the opportunity to testify 
before this distinguished committee. I would be happy to answer 
any questions you and your colleagues may have.
    [The prepared statement of Todd J. Teske follows:]
    [GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Whitfield. Thank you, Mr. Teske. And our next witness 
is Mr. Brooke Coleman who is the executive director for the 
Advanced Biofuels Business Council, and you are recognized for 
5 minutes.

                  STATEMENT OF BROOKE COLEMAN

    Mr. Coleman. Thank you. Good afternoon, Chairman Whitfield, 
members of the committee. My name is Brooke Coleman. I am the 
executive director of the Advanced Biofuels Business Council. 
Thank you for the opportunity to testify today. We represent 
worldwide leaders in the effort to develop and commercialize 
the next generation of advanced and cellulosic biofuels.
    I want to start with a general observation about the 
Renewable Fuel Standard. I think it is safe to say that the RFS 
is a lightning rod of sorts; the question is why. There are 
those who say it is because the RFS doesn't work. But I think 
if you look at the success rate of innovation and deployment in 
the renewable fuels industry and the historic positioning of 
the oil industry when it comes to trying to avoid competition 
at the pump you will have your answer.
    In just 10 years, the biofuel industry has emerged to 
create hundreds of thousands of jobs and displace the need for 
billions of gallons of petroleum imports annually. If you look 
at perhaps the most criticized biofuel, ethanol, you will find 
that it also happens to be the most disruptive to the status 
quo. The ethanol industry supports hundreds of thousands of 
U.S. jobs alone in more than two dozen states and now threatens 
to bring new blends and real consumer choice to the pump. The 
ethanol industry is a target for a reason.
    And now we are innovating. The United States is home to the 
largest commercial cellulosic ethanol plant in the world, 
DuPont's facility in Nevada, Iowa. POET-DSM cellulosic facility 
in Emmetsburg, Iowa, produces enough renewable electricity as a 
co-product to power itself and the grain ethanol facility next 
door. Quad County's first generation ethanol plant in Galva, 
Iowa, now produces cellulosic ethanol from corn fiber using a 
technology called Cellerate that also reduces energy inputs. 
Quad County's fuel is 126 percent better than gasoline on 
carbon. It is a carbon sink.
    But disrupting the status quo does not come easily. Our 
adversaries have enough money to fill the airways with 
allegations about the RFS, but are any of these allegations 
actually true? We have heard about corn ethanol and food 
prices, but corn prices are about the same today as when the 
RFS was passed, and food industry profits--an important part of 
this--are soaring.
    Higher ethanol blends like E15 could damage cars, they say, 
except the Department of Energy found no problems with 15 
percent ethanol blends or 20 percent ethanol blends in 86 cars 
tested for up to 120,000 miles each. Some small engine 
producers including Briggs say they are concerned about 
ethanol, but they sell their engines to Brazil where gasoline 
contains more than two times as much ethanol as we have in the 
United States today.
    Oil even ran a commercial during the World Series last year 
claiming that ethanol is worse for the climate than gasoline 
and we heard Congressman Welch say it today, except that USEPA, 
the California Resources Board, and the national labs like 
Argonne and National Research Energy Laboratory all say they 
are wrong.
    On the issue of pump prices don't take my word for it. 
Former Shell Oil president John Hofmeister recently stated, 
quote, we need a competitor for oil. We need to open the market 
to replacement fuels. Competition will drive transportation 
fuel prices down structurally and sustainably, unquote.
    This is exactly what is happening with the RFS. Energy 
economist Phil Verleger, he used to advise Presidents Ford and 
Carter and the oil industry itself, recently said, ``The 
renewable fuels program translates to consumers paying between 
50 cents and 1.50 per gallon less for gasoline, when gasoline 
prices were high, by adding the equivalent of Ecuador to 
extremely tight world liquid fuel markets.
    If there is one thing that we should all agree on it is 
this. Having only one option to power cars and trucks runs 
contrary to the fundamental premise of competition that 
underpins our economic system, and if we do not control that 
resource, as we have seen, it leaves us vulnerable to foreign 
cartels often working against us.
    And that is where I want to close. There are those who want 
policymakers to believe that quote, things have changed; that 
we don't need the RFS anymore because the U.S. oil boom and low 
gas prices. But really, nothing has changed. When we got hit 
with record high oil prices in 2008, Americans transferred 
nearly $1 trillion to OPEC members in just 6 to 8 months paying 
for motor fuel, a predicament that helped throw the United 
States into deep recession.
    Now Saudi Arabia is hitting us with the other end of the 
stick by intentionally making oil so cheap that U.S. shale and 
deepwater drillers cannot compete, and it is working. U.S. 
tight oil and deepwater drilling operations are going belly up 
putting Americans out of work. It is nice to pay $1.50 for 
gasoline, but what is actually happening is foreign oil cartels 
are using their market position to snuff out competition and 
repossess the U.S. fuel energy sector. Ironically that is 
exactly what the oil industry hates about the RFS here in the 
United States, that it threatens their chokehold over the 
American consumer at the pump.
    If I could leave you with one thought it is this. Congress 
made a commitment and investors have spent billions in private 
capital to answer the call to create these biorefineries and 
create these fuels. The RFS doesn't distort a free market, it 
corrects a noncompetitive one by forcing choice at the pump. It 
also happens to be the best advanced low carbon biofuel policy 
in the world.
    What we do not need is for Congress to change a good law. 
What we do need is help convincing the Obama administration to 
block out the noise and administer the program as designed. 
Thank you for the privilege of speaking today and I look 
forward to your questions.
    [The prepared statement of Brooke Coleman follows:]
    [GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Whitfield. Thank you very much, Mr. Coleman. And our 
next witness is Mr. Collin O'Mara, who is the President and CEO 
of the National Wildlife Federation. Thanks for being with us. 
You are recognized for 5 minutes.

                   STATEMENT OF COLLIN O'MARA

    Mr. O'Mara. Thank you, Mr. Chairman, Vice Chairman Olson, 
and Mr. Tonko. Thank you for having a wildlife voice on this 
panel and a sportsman voice on this panel. When this law was 
debated in 2007 there wasn't much conversation about land use, 
and as I travel the country I keep having that Toby Keith song 
in my head, ``I wish I didn't know now what I didn't know 
then.`` There is a lot that we didn't know in 2007 about land 
use.
    There is a study by the United States Department of 
Agriculture that said that more than eight million acres that 
were not in production that were in some kind of habitat are 
now in production, and a big chunk of that is because of the 
RFS. There is just a study from the University of Wisconsin 
that said that 7.4 million acres of habitat has gone into 
production.
    Sixty seven percent of that land is marginal. These are 
things like grassland prairies. These are things like, some 
wetlands and some forest land. And there are a lot of factors 
for this, but one of the big reasons is this massive drive 
towards ethanol. Ethanol production in terms of the total kind 
of all of the supply of corn that is being produced went from 
nine percent going towards ethanol before the RFS to 40 percent 
today. So you are seeing a big demand.
    And farmers are rational. I mean, I grew up in a farming 
community in Upstate New York. If there is a profit there they 
should go there, but it is an artificial one that is being 
created by government and once again wildlife and sportsmen are 
the ones that lose.
    Seventy seven percent of these eight million acres that 
both USDA and University of Wisconsin have identified are 
grasslands. And these are incredibly important lands. I mean, 
you have had conversations before this committee and others 
around the imperiled sage grouse, around the meadowlark. I 
mean, things that you are hearing are having kind of 
precipitous declines. We are losing habitat at a pretty 
alarming rate.
    Pheasant numbers right now in a whole lot of states are 
down. They had a million, a million birds were shot in Iowa 
before the RFS. There are about 100,000 now. Again there are 
many factors, but the drive for more and more corn on the 
ground is a big one of those and again wildlife and sportsmen 
end up losing.
    If you only take one thing away from my testimony today it 
is that we have to better understand these land use impacts and 
the water implications. You know, if you look at, if you look 
right now we have lost more than a million acres, 1.6 million 
acres of native grasslands from 2008 until today, and that is 
bigger than my home state of Delaware. I mean that is a lot of 
land. And when you start thinking about those uses it gets kind 
of scary when these volumes continue to go up.
    There was a commitment that this Congress made when we were 
debating this policy originally that there would be no, kind of 
no lands that weren't in production before 2007 would be 
affected by this policy, and unfortunately though EPA has never 
upheld their end of the bargain.
    They use something that they call aggregate compliance and 
so they basically look at all the acres across the entire 
country including those that are in the Conservation Reserve 
Program. They look at all these acres and they see whether or 
not there is any kind of impact. They don't know whether there 
is forest being lost in Wisconsin or Minnesota. They don't know 
whether there is wetlands being lost in the Prairie Potholes. 
They don't know whether there is kind of impacts in Nebraska or 
Iowa and the grasslands. And again wildlife loses over and over 
again.
    I would also like to talk about water, because one of the 
things that happens when you put more and more corn in 
production you have folks switching from other crops to corn, 
corn is pretty hard on soils. You need a lot of fertilizer to 
grow corn. And what ends up happening is as you have more and 
more precipitation you have that water then wash those 
nutrients into the waterways and all of sudden then you get 
these big algal blooms.
    Again you have seen record algal blooms. I was with Mr. 
Latta in his district up on Lake Erie. You know, you had algal 
bloom in the state of Ohio, in Toledo that had a half a million 
people not able to drink water for 3 days. Now when you put 
more and more kind of corn on the landscape and you take these 
acres of grasses or wetlands or forest out of habitat into 
production, you lose that value for them to bring up those 
nutrients. And so this wasn't supposed to happen. I mean there 
is very clear language that EPA is supposed to take action if 
there is any kind of economic or environmental harm. They 
haven't been doing this because of this compliance approach.
    And so we have three recommendations that we hope the 
committee will consider. The first one is that--Mr. Welch 
brought this up earlier, we really need to demand the Triennial 
Report. Now there was a report in 2011 that said that the 
impacts would be very inconsequential on the landscape, it is 
just not true. We have verified from academic institutions--and 
I have no economic stake in this. I just want good hunting. I 
just want good fishing, good birding. I want to make sure that 
we have enough wildlife to pass on to our kids. So the first 
thing, we need that report because what it is going to show is 
that we have lost a lot of acres of habitat.
    The second thing is that we have to have EPA follow the 
law. And you heard today when folks talk about the 
environmental consequences they only talk about air. You have 
heard it from EPA today, you have heard it from other people on 
this panel. They don't talk about the land use and the water 
implications. We need to look at all of those. And frankly we 
need to get that right now, because as you have billions of 
gallons of advanced biofuels coming onto the landscape we need 
to make sure that is also not taking more and more land away 
from hunters, anglers, and wildlife.
    And then the third thing is that we need to make the RFS as 
a statute much more wildlife friendly. We need to make sure we 
get rid of this aggregate compliance mechanism where they look 
at the total land instead of looking at the individual lands 
that are being converted for crops. We need to accurately 
assess the impacts on wildlife. We need to make sure that we 
are moving the number below the blend wall because we see when 
we are above that we are losing too much land for wildlife.
    And also there is other policies, things like the 
Conservation Reserve Program that has been cut, things like the 
North American Wetlands Conservation Act, other subsidies, 
other conservation programs that we cut that now some folks say 
is a good thing. The problem is when you cut those things all 
of a sudden farmers want to put their land into production 
instead of keeping it for habitat.
    So again we have kind of met the enemy and he is us in this 
case. This was a government-created crisis in many ways. Thank 
you.
    [The prepared statement of Collin O'Mara follows:]
    [GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Whitfield. Thank you, Mr. O'Mara.
    And now our next witness is Ms. Anne Steckel who is Vice 
President of Federal Affairs for the National Biodiesel Board, 
and you are recognized for 5 minutes.

                   STATEMENT OF ANNE STECKEL

    Ms. Steckel. Chairman Whitfield, members of the committee, 
thank you so much for the opportunity today to testify on 
behalf of the thousands of employees working across the country 
in the biodiesel and renewable diesel industries.
    My name is Anne Steckel, and I am vice president of Federal 
Affairs for the National Biodiesel Board. I am proud to 
represent the most successful advanced biofuel in America. In 
fact, biodiesel and renewable diesel are the unsung heroes of 
the RFS Advanced Biofuel Program. If you take away one thing 
from my testimony today I hope it is the following. While there 
are certainly areas that could be improved, the RFS has made a 
tremendous progress in developing advanced biofuels and 
delivering them to American consumers.
    Biodiesel and renewable diesel have made up the vast 
majority of the advanced biofuels in the RFS including filling 
more than 90 percent in the category in the last 2 years. Last 
year alone, American consumers used nearly 2.1 billion gallons 
of biodiesel and renewable diesel. That is 2.1 with a B, out of 
an overall diesel market of about 60 billion gallons. As a 
result of the RFS many truck stops around the country today are 
selling biodiesel blends of 10 to 20 percent. In fact, with 
help from a state program the majority of diesel fuel in 
Illinois, also my home state, is sold with at least 11 percent 
biodiesel.
    Biodiesel is a clean, renewable diesel alternative made 
from a wide variety of fats and oils including recycled cooking 
oil, soybean oil, and animal fats. Our industry has plants in 
nearly every state in the country, in big cities and rural 
communities along the east and west coasts and throughout the 
heartland. Every 100 million gallons of biodiesel production 
supports some 3,200 jobs.
    According to the lifecycle analysis conducted by the EPA, 
biodiesel reduces greenhouse gas emissions by at least 57 
percent and up to 86 percent. The California Air Resources 
Board and other institutions have made similar or even stronger 
findings.
    Greenhouse gas emissions reductions, however, are just one 
of biodiesel's many environmental benefits. It also reduces 
waste in landfills, keeps oil and sludge out of sewer 
infrastructure, maximizes the efficient use of agricultural 
byproducts, and significantly cuts emissions of other air 
pollutants particularly air toxins.
    Building new energy industries is no small endeavor. Taking 
a biodiesel industry that barely existed a decade ago and 
building it into a commercial scale enterprise is something we 
should all be proud of. U.S. biodiesel producers have made 
tremendous investments diversifying their feedstocks and 
increasing efficiency. There remains significant untapped 
production capacity on the ground today, and biodiesel 
producers across the country will tell you they stand ready to 
invest and expand and hire with strong, stable policy.
    I would be remiss if I did not thank the EPA for getting 
this program back on track from a timing perspective. The 
stability provided by timely standards is very important. 
However, we continue to believe the agency is underestimating 
the volume of biodiesel that can be delivered.
    First, it is important to remember that biomass-based 
diesel volumes are currently established under a different 
process than the other RFS categories. The law requires the EPA 
to set a minimum applicable volume for biomass-based diesel 14 
months in advance. So the most recent RFS proposal covers 
biodiesel volumes 2 years from now in 2018, while covering 2017 
volume for other fuel categories.
    Under the pending proposal, the EPA would set a biomass-
based diesel volume of 2.1 billion gallons for 2018. The 
industry looks on pace to exceed the volume this year and the 
EPA itself projects that we will see 2.5 billion gallons of 
biodiesel and renewable diesel in 2016 and 2.7 billion gallons 
in 2017.
    The RFS is not a status quo policy. It was designed to 
drive investment and innovation. We believe EPA can and must 
implement the program to provide aggressive growth. 
Specifically, we are calling for the EPA to finalize a volume 
of at least 2.5 billion gallons for biomass-based diesel and 
set more aggressive goals for advanced biofuels.
    I believe the reasons the RFS were initially created are as 
compelling today as they were then and that biodiesel is 
leading the nation in the transition to clean advanced 
biofuels. Strong biomass-based diesel and advanced biofuels 
programs in the RFS are critical to ensure that this success 
continues. Again I appreciate the opportunity to speak with you 
all today and would be happy to answer any questions you may 
have. Thank you.
    [The prepared statement of Anne Steckel follows:]
    [GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Whitfield. Thank you, Ms. Steckel.
    And our next witness is Mr. Tim Columbus, who is the 
General Counsel for the National Association of Convenience 
Stores and Society of Independent Gasoline Marketers of 
America. So Mr. Columbus, welcome, and you are recognized for 5 
minutes.

                   STATEMENT OF TIM COLUMBUS

    Mr. Columbus. Mr. Chairman, members of the committee, thank 
you. My name is Tim Columbus. I am a partner at Steptoe & 
Johnson and I am here today on behalf of our clients, the 
National Association of Convenience Stores and the Society of 
Independent Gasoline Marketers of America.
    From what you have heard so far there seems to be some 
diversity of view as to the pros and cons of the Renewable Fuel 
Standard. My clients are the guys caught in the middle. They 
are caught in the middle between two major sources of supply 
for what they sell, and consumers and manufacturers.
    I think it is important for the committee to understand 
that retailers of motor fuels are for the most part absolutely 
agnostic about what liquid motor fuels we sell. Our objective 
is to sell legal fuels in a lawful way to people who want to 
buy them. I will tell you that for the most part, not uniformly 
but for the most part, the retail segment of the marketplace 
has been served well by the RFS because it has in fact achieved 
one of the statutory objectives which was to broaden and 
diversify the fuel pool from which my clients purchase the 
products they sell to consumers. Now having said that let me 
move on to the proposal that EPA has put before you.
    At the outset, my market segment along with others is 
deeply grateful to EPA for putting this out on time this year. 
We are very grateful for the recognition by EPA of the 
existence of a ``blend wall.'' And I have heard some people 
talk about an ethanol blend wall. The way I would define blend 
wall is there is a lack of RINs. There is an inadequate number 
of RINs to satisfy the demand of the obligated parties for 
RINs.
    And because of the characteristics of this program where an 
advanced biofuel RIN can be used to retire more than one 
renewable volume obligation, the fact that biodiesel RINs can 
be used not only for advanced biofuel but also to retire other 
such as corn ethanol obligations is an important thing for you 
all to keep in mind when you are talking about a blend wall. So 
the fact that the RVO for gasoline this year has something more 
than ten percent doesn't mean that will all be satisfied by 
ethanol.
    For those who want bigger RVOs, I have to tell you that 
achievement of those numbers is going to be tough and we face 
as retailers two very significant problems. Number one is an 
infrastructure problem. As most of you know, under four percent 
of the retail outlets in the United States are owned or 
operated by integrated refining companies. That means our folks 
own those and invest in them. More than half of the retail 
outlets in the United States have changed hands in terms of 
ownership in the last 15 years.
    The impediment to going on for higher blends of renewables 
is the fact that we have an affirmative obligation under any 
number of regulatory regimes, whether that be a fire code at 
the state level or the Office of Underground Storage Tanks at 
EPA, to regulations to make sure on an affirmative basis that 
the retailer can demonstrate that the equipment in which he is 
storing and through which he is dispensing these fuels is 
compatible with those fuels. That is really hard.
    Now as to demand for new products, retailers live to 
satisfy demand. But retailers sell products only because 
customers want them. Customers don't buy products because 
retailers offer them. If that were true we would offer a lot 
shabbier stuff and we would make more money. The reality is 
that there are markets in which E15 and E85 demand has risen, 
and in those markets retailers are in fact offering the 
products that the market demands. That is not true as broadly 
as some would have you think.
    Having said all those things, I think we would sum up with 
EPA has done a commendable job from our perspective of doing 
exactly what this committee and Congress in general asked it to 
do several years ago, which was to administer the program as if 
it were under adult supervision and to avoid a blend wall 
breach which would generate truly unpleasant consequences for 
the marketplace. And with that I thank you for your time and I 
offer to answer any questions you have that I can.
    [The prepared statement of Tim Columbus follows:]
    [GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Whitfield. Thank you, Mr. Columbus, and thank all of 
you for your testimony. At this time, Mr. Olson, I will 
recognize you 5 minutes for questions.
    Mr. Olson. I thank the chairman and welcome to our second 
panel. I have to correct oversight from the first panel. I want 
to enter a statement for the record from Commander Kirk 
Lippold. Kirk was a navy commander in charge at the USS Cole 
when she was blown up in Aden, Oman, and he submitted a 
statement for me about the effects of RFS on national security. 
He thinks it hurts it, so without objection, sir, I would like 
to enter that for the record.
    Mr. Whitfield. Without objection.
    [The information appears at the conclusion of the hearing.]
    Mr. Olson. Thank you. My first question is for you, Mr. 
Columbus. First of all, I have to say thank you, thank you, 
thank you. Your organization got me out to see a convenience 
store, the Stripes Store at 12091 Westpark Drive in Houston, 
Texas. There I learned a couple of things. First of all, 
members of Congress should never roll flour tortillas. They get 
all messed up.
    I also learned that most of your members are not opposed to 
ethanol as a fuel. They just want to give customers the fuels 
they want and they need. At the same time, some folks point to 
E85 and E15 as our way forward on ethanol. Are most consumers 
at your member stores asking, begging for E15, and could you 
easily roll out the infrastructure for E15 if necessary?
    Mr. Columbus. Mr. Olson, what I have to tell you is it 
depends on the market you are in. You know, all markets are 
local in demand. If you are in Minnesota or Iowa there are 
people saying they want E15. If you are in Oklahoma there are 
people who want E0. And therefore what you are going to see is 
retailers across this country do what they have been doing for 
decades and that is responding to what the customers who walk 
into their establishments demand.
    And, while retailers are always appreciative of any money 
Congress will offer them to upgrade their facilities--I assure 
you that is true--if there is substantial demand for E15 in a 
marketplace you are not going to have to give people grants to 
upgrade their tanks. They will make that because it is in their 
pecuniary interest to do so. That is how markets work. We have 
not seen the overwhelming demand that I think many people, 
particularly because of flex-fuel vehicles treatment, had 
anticipated for E85 anywhere.
    Mr. Olson. Thank you.
    Questions for you, Mr. O'Mara. There is an article today in 
the Houston Chronicle, a study at LS University, Louisiana 
State, about a growing dead zone in the Gulf of Mexico. They 
say this year it will be one-third larger than it was last year 
primarily due to chemical fertilizers running down the 
watershed from all over the Mississippi River Water Basin. That 
is corn country.
    You said that increased demand for corn ethanol has driven 
the creation of new acreage in some unusual places. Your 
written testimony talked about the Texas Panhandle, also a fact 
that 67 percent of new cropland like the Panhandle is marginal 
or unsuited for planting. Can you talk about what this means 
for Texans at the pump, at the grocery store, and at our 
Whataburgers?
    Mr. O'Mara. Sure. Thank you, Mr. Olson. What you are seeing 
as folks are trying to meet the market demand because they are 
rational, they are trying to make money--we respect that--they 
are planting in more and more places that don't really make 
sense. And so when you are planting in the Panhandle as you 
know as well as anybody, the amount of irrigation you are going 
to need to try to make that land have any level of production 
is pretty high. Now you have had some water shortages in that 
part of the country too, and so that is water that ends up 
hitting in other places so then you see higher costs of water, 
other price impacts, and other increasing, both increasing 
price and also decreasing the amount of flow for fish and other 
wildlife. And so it is kind of bad on all fronts when you are 
growing in these places that we have never grown historically 
because it just doesn't make sense unless there is an 
artificial government price support.
    Mr. Olson. OK, yes. Final question for Mr. Thompson. As you 
know, I have long said the RFS is a mandate designed for a 
world that no longer exists. One of ever higher gasoline demand 
and ever lower oil capacity that world is gone. The terms peak 
oil and peak natural gas are not used anymore. And now both 
Congress and the EPA are left trying to cobble together a way 
forward trying to put a round peg in a square hole.
    I know that you believe that EPA has done some good work in 
using its waiver authority to a degree, but do you believe that 
we are on a path that is realistic for your members to comply 
with long term?
    Mr. Thompson. Certainly not, and that is why we believe 
full repeal is due. As I have pointed out in my testimony both 
written and oral, you know, the problem is EPA is for next 
year's proposal, again just 6 months from now, they are asking 
to increase the RFS by 700 million gallons. It is not feasible 
particularly when you tick down--a lot of folks on this panel 
talked about creating choice, it is really doing the opposite 
and it is eliminating choice. EPA's proposal will eliminate E0, 
something that we know the American consumer wants. It would 
take it from 5.3 billion gallons down to 200.
    And also Mr. Columbus talks about whether people want E15. 
Well, the truth is it is virtually zero right now and what EPA 
is suggesting will happen in 6 months it will go from zero to 
600 million gallons. It is not going to happen. E15 is only 
sold at 312 stores today. And then the same with E85. EPA 
argues that in 6 months the volume is going to go from 87 
million gallons up to approximately 400 million gallons. 
Consumers don't want these products. This program is no longer 
serving the purpose that this body created the RFS to tackle. 
It is time for it to be repealed.
    Mr. Olson. Thank you. Well, I raise one final point. At the 
highest levels there could be confusion at the pump. President 
Obama went to Israel a couple years ago. He took his limousines 
there. Guess what, one was broken down by Secret Service guys 
because guess what they did, they put gasoline in a diesel 
engine.
    Mr. Dinneen. Congressman, just real quick. With the 
discussion about what consumers want in fuel I will guarantee 
you there is no consumer that wants benzene or xylene or any 
other toxic aromatics in their fuel either. And so the 
discussion about what consumers want is interesting, but I 
assure you, you ask consumers they would want a domestic clean-
burning fuel additive.
    Mr. Whitfield. Thank you. Thank you.
    Mr. Olson. I yield back.
    Mr. Whitfield. The gentleman's time has expired. At this 
time I recognize the gentleman from Vermont, Mr. Welch, for 5 
minutes.
    Mr. Welch. Thank you very much, Mr. Chairman. I think you 
are right consumers want clean-burning fuel, but Mr. Teske, I 
will ask you. Has the ethanol had any impact on engines? I had 
a carburetor from a motorcycle that was just gunked up with 
ethanol according to the mechanic. Tell us your history with 
that.
    Mr. Teske. Thank you for the question. Ethanol certainly 
does have an impact on an engine. It really does two different 
things. When you have higher levels of ethanol, say E15 that 
you would put into a small engine, it will run at higher 
temperatures. These engines are really tuned, if you will, for 
emissions regulations to last for a long time and what happens 
is the higher temperatures will distort the material and 
thereby defeat some of the emissions requirements that are out 
there.
    The other thing that ethanol does because it is alcohol 
related is it attracts water. And so when you have a fair 
amount of water that comes in to an engine it will corrode the 
engine, you will have scoring on the bore. You will have a 
number of different things. Your props, if you will, I am not 
surprised by. I didn't see them or examine them, but that is 
very consistent with what we generally see when you introduce 
higher levels of ethanol.
    Mr. Welch. It is interesting. I found out about--I didn't 
know about this issue, but I was up at a county fair and a 
bunch of Vermonters surrounded me. This was years ago after I 
was first elected, and I was clueless about ethanol as I was 
clueless about a lot of other things. But they were insistent 
that their motorboat engines, their chainsaws, and their 
snowmobiles to some extent were really having been damaged by 
ethanol, so that is all consistent with your experience.
    Mr. Teske. Yes.
    Mr. Welch. And my chainsaw got wrecked, and I guess I was 
stupid to leave the ethanol in there a little bit longer than 
it should have been, but my mechanic told--I was pretty blue 
because I love this chainsaw and ethanol does that to 
chainsaws?
    Mr. Teske. Yes. So from our perspective obviously our 
engines will run up to E10 and so it is plus or minus five 
percent, right, on each side we can design an engine. So we are 
not against ethanol, but ethanol does have negative impacts.
    Mr. Welch. Right.
    Mr. Teske. The higher the blends the more difficult it is 
for these engines to sustain----
    Mr. Welch. Thank you.
    Mr. O'Mara--thank you. We all so want to have our fertile 
land in productive work feeding the United States, feeding 
other countries. But we had a situation here with ethanol where 
it was a trifecta of governmental policies to encourage this 
production of ethanol. There was the 54 cent a gallon tax 
incentive, it was the 45 cent a gallon tariff barrier, and then 
it was the requirement, the mandate that you or I purchase 
ethanol. And I literally know of no other industry that has 
ever received that trifecta of governmental support. A lot of 
industries might like it, but it is as far away as you can get 
from a free market.
    Now one of the concerns I have had you have talked about, 
and that is that incentive worked. Folks who were in the corn 
belt saw that there was an opportunity and--I don't have any 
problem with it. Why wouldn't you if you are a corn farmer? But 
what happened to the overplanting? What happened to the 
conservation land program that was really being quite 
successful and with the tradeoff where if you put your fragile 
land out of production you would get some help making it with 
soil conservation and with drainage and other things?
    Mr. O'Mara. Thank you, Congressman. Thank you to you and 
Mr. Griffith for raising the wildlife and the land piece. That 
actually had a fourth and fifth point to your three. We saw 
massive reductions in the Conservation Reserve Program as you 
mentioned, and you have pretty generous insurance programs as 
well. And so you put that all together and it is again just 
wildlife bears the brunt of that.
    And so we have seen the number of acres in Conservation 
Reserve go from little, 35-36 million before the RFS; you are 
around 25 million right now. Those ten million acres, a lot of 
which were providing very important habitat, is roughly 
equivalent to the same number that Wisconsin and USDA are 
saying went into production. And so, we are losing habitat at 
again at the expense--because of government policy we are doing 
it ourselves. This isn't market driven. This is government 
driven.
    Mr. Welch. I really appreciate it. What has been tremendous 
about my being involved in this issue was seeing folks who 
never thought they would probably be sitting at the same table. 
You know, you are here, you are here, you guys actually get 
along, you know. Let's take this model and put it in other 
places as well. But it is in the farm community it is a 
benefit. If you are a corn farmer it is tremendous.
    And I am from a dairy state and I love our farmers. They 
are literally the hardest working people in Vermont. Nobody 
works harder than our farmers, whatever it is. But if you are a 
corn farmer it has been helpful, but if you are a feed-using 
farmer it has really been a hammer. The margins for our dairy 
farmers are really tight, and the grain costs which I 
absolutely believe have been affected by 40 percent of corn 
going into ethanol has increased their costs and decreased 
their security. So I want to thank all the panelists for being 
here.
    Mr. Coleman. Congressman, could I provide a response on 
land or is----
    Mr. Welch. I think I am out of time. I am sorry.
    Mr. Whitfield. That is OK. Go ahead.
    Mr. Coleman. Thank you, Chairman. So there is another side 
of this, and as an advocate for advanced biofuels we want to 
grow responsibly. And I want to just add for the record a 
couple of different things that my colleague to my left and my 
colleague a couple seats down has not mentioned. With regard to 
the land and the agricultural footprint, one of the reasons 
that EPA has not gone through an acute analysis of this is 
because the agricultural footprint in this country continues to 
decline from an acreage perspective. So I want to correct the 
record. That doesn't mean there are not acute problems in 
different places, but Mr. O'Mara has suggested that the RFS is 
driving the land up and actually the agricultural footprint. 
And they have done that analysis. EPA has done that analysis.
    The other thing that needs to be mentioned here is there is 
a correlation-causation issue here. It is true that 
Conservation Reserve acres have gone down since 2008 when the 
RFS went in. What is also true is the Conservation Reserve 
Program which pays farmers to keep those acres out of 
production has been cut from a funding perspective and the 
correlation between those acres in existence and being paid to 
make sure they are existence is a heck of a lot stronger than 
the RFS as the cause for that problem.
    Third and final point, my more fundamental issue with folks 
who are blaming the RFS for all these land-based problems is 
that farmers, which Mr. O'Mara did mention, plant a price. If 
you are getting $8 a bushel for corn versus $4, you want to 
plant corn. That is not for biofuels. That is I can get $8 for 
corn. What drove up the price of corn and all these other 
agricultural commodities, if you look at the correlation it is 
the increasing price of oil. Why does the price of oil go up? 
It is because we don't have alternatives.
    And so from a boogeyman perspective, I think with respect 
that the biofuels industry is being blamed for things that are 
largely the response of markets to higher oil prices that 
happened over the last 5 years. Thank you for the opportunity 
to provide that.
    Mr. Whitfield. So you said overall farmland has not 
decreased?
    Mr. Coleman. Yes. From year to year USDA with EPA does an 
analysis of the U.S. agricultural footprint, and generally for 
the last 50 years it has been trending down because agriculture 
has gotten more efficient per acre and it continues to trend 
down. So there is not an explosion nationally that is 
happening. Now if we want to start talking about the seven 
million acres I would be happy to converse with my colleague on 
that as well.
    Mr. Whitfield. Mr. O'Mara, what were you going to say?
    Mr. O'Mara. Well, the concern that we have is the virginal 
habitat. Again, the habitat that has gone into production the 
last few years. I mean, we have lost 1.6 million acres of 
native grasslands that is incredibly important habitat for 
pheasant hunters and everything else. And so I don't disagree 
that the overall that--I do disagree. The USDA data shows the 
acres that we are losing for production is actually increasing. 
Now there are some acres that are taken out of production. 
Since the RFS the acres taken out of production are less than 
the acres being put into production, so most of these years so 
it is several million acres additional.
    But at the end of the day, we are losing forests, prairies, 
and wetlands because folks are trying to meet this higher 
price, most of which is supported by government. This isn't a 
global commodity price that we are creating. The market here is 
fundamentally different than other places because of these 
price supports and the points that Mr. Welch made.
    Mr. Whitfield. The gentleman's time has expired. Mr. 
Griffith, you are recognized for 5 minutes.
    Mr. Griffith. Well, I am enjoying this discussion 
immensely. I have to tell you it is exciting when you have 
environmentalists, people who are environmentalists disagreeing 
with each other. We heard comment earlier we have Democrats 
agreeing with Republicans and Republicans disagreeing with 
Republicans and Democrats disagreeing with Democrats. So it is 
an interesting discussion. Surely we must be able to find a 
balance in there somewhere.
    I have to tell you, in my area some of that land is going 
out of production. And I can't say it is the only factor, but 
one of the factors might be the fact that it is hard to 
guarantee from year to year for my cattle farmers and my dairy 
farmers that their corn price isn't going to spike, and a big 
part of the concern when it does spike is ethanol. And so I 
can't say that that is not a legitimate concern.
    I also have folks as Ms. Steckel pointed out--nice job--in 
her written stuff to my district that my district does produce 
some biodiesel. I also had a project that has not been 
successful that was taking hamburger grease, or had the plants 
take hamburger grease and turn that into biodiesel. I think 
that is exciting stuff. So the technology may eventually get 
there.
    But I am very concerned, Mr. O'Mara, as you may recall from 
our previous conversations, I am very concerned that we are 
creating problems in the environment and I wish in some ways 
that the EPA would play fair, and let me explain.
    I come from a coal producing district. They had a guideline 
at one point, which was later ruled invalid by the courts, on 
water based on a study in a handful of counties in central 
Appalachia with about seven or eight, nine species of mayflies 
in which one was significantly impacted by runoff water from 
the coal mines. If they did the same thing to ethanol, I think 
based on what you have told me today, Mr. O'Mara, the EPA might 
be up in arms but they haven't done that report. And I believe 
your written testimony tells us they are 4 \1/2\ years on a 3-
year program and no plans to get it done.
    What can we do to help push them along to get that report 
done, because I want the data. I want to see a balance and I 
want to see the renewable fuels succeed. I would like to see 
more of it come from non-ethanol biodiesel, but at the same 
time we are going to have some ethanol out there. I don't think 
we should shut it down.
    But Mr. O'Mara, what can we do to get the EPA to get us the 
data that we need so that we are able as Congress to make 
intelligent, appropriate decisions in trying to balance out the 
concerns?
    Mr. O'Mara. And I thank you for that question and for 
everything you do for wildlife. I think this committee has to 
demand the report. I think Mr. Welch did, I think you did as 
well. I mean, I think there is data. And also we have to send a 
very clear signal that when we are asking them to evaluate the 
environmental impacts we are not just talking about air. You 
have the air administrator here, she is talking about it. And I 
am here defending her a lot of times. I have testified before 
you several times defending EPA on different issues.
    This is indefensible, and I think there is two issues. One 
is that they are not looking at the land and water impacts, and 
the second is that they are not--this aggregate compliance 
approach, we know where coffee comes from. We know where our 
trees come from, our paper products come from. We source these 
things in every other industry. The idea that we can't know 
where the corn is coming from and whether it is from a virgin 
prairie or a native prairie or it is coming from land that has 
been farmed for 200 years is crazy to me.
    We can do a better--because we know that we are fine by 
having, if we actually did a good job as long as we are not 
taking additional habitat, but wildlife shouldn't have to lose 
so a couple of industries can win. I mean that is for me the 
bottom line.
    Mr. Griffith. Well, I think that is important and I hope 
that we can take a look at the effect on the species that you 
listed in your report. And I think it is important to underline 
again, because it is not just those of us that might like to 
watch wildlife, it is also the hunters that are affected. And 
you said in your opening statement, and I would like for you to 
repeat that if you would just because we don't know what 
insomniac might be watching this hearing sometime late at 
night. But you gave a number on the ring-necked pheasant hunt 
in Iowa.
    Mr. O'Mara. Yes.
    Mr. Griffith. They are not usually in my area unless there 
is a stray. But give those numbers again if you would.
    Mr. O'Mara. Yes. So I mean if you went out flushing in Iowa 
in 2004, 2005, the bag limit was more than a million; 100,000, 
the last couple years. Again there are many factors, but we are 
losing a lot of their habitat.
    Mr. Griffith. Right.
    Mr. O'Mara. No habitat, no birds.
    Mr. Griffith. Now do you have any data on the fish species 
that might also be impacted? I know Mr. Olson mentioned the 
dead zones that might be impacted in part by this expanse of 
the cornfields.
    Mr. O'Mara. Yes, so I mean on the freshwater side when you 
have these algal blooms in places like Lake Erie--walleye, 
perch--you are going to see, you are going to see an impact on 
bass, and basically they will go somewhere else.
    And so the problem is that if you had another panel and you 
invited some of the tour boat captains, the folks that are 
taking folks out on Lake Erie, it is a death knell for them, 
because if you have that amount of runoff coming in and there 
is more rain so more is being washed off, they lose their 
livelihood.
    And so I mean, we have been working with folks in the Great 
Lakes that are basically saying, look, like we shouldn't be the 
ones that bear the brunt of this because the walleye are gone 
because they are going further inland which we can't get to.
    Mr. Dinneen. Congressman, can you indulge me just for a 
moment of actual agreement?
    Mr. Griffith. All right, let us hear it. I have got 
agreement here.
    Mr. Dinneen. I absolutely agree that it would be a good 
idea for EPA to update much of this analysis. We have been 
living for years with a carbon analysis that the agency did on 
ethanol in 2007 that is just flat out wrong. The science has 
demonstrably changed and we would love for the agency to update 
that so that we can demonstrate again the significant carbon 
benefits.
    And I would agree that they ought to do the Triennial 
Report as well and look at all the environmental impacts 
because we are quite frankly pretty confident that it is going 
to show tremendous benefits. I mean, we have talked about what 
the impacts might be on water. Indeed, throughout the RFS the 
size of the dead zone in the Gulf has been shrinking. I don't 
know about Lake Erie, but the one they usually talk about is in 
the Gulf and that has been shrinking. Farmers have been getting 
far more efficient.
    So I agree, let's get the agency to get some of these 
analyses updated.
    Mr. Griffith. Well, and if I might, Mr. Chairman, if you 
would indulge me, I might say that I agree and it might be nice 
if the EPA would concentrate on these things that they are 
mandatorily supposed to be doing under the code sections 
instead of going into areas they are not supposed to be going 
into.
    I note that there was a court case came out yesterday where 
the court said they don't have authority to do what they were 
doing regarding fracking. You know, OK, people, do what you are 
supposed to do and let us decide where you are supposed to go 
do something different. And I would appreciate it if they would 
get that done. And I am glad that I was able to bring the 
various parties into agreement this morning on that issue if 
nothing else, and I appreciate it and yield back.
    Mr. Dinneen. Well, the other place I think we would 
probably see some agreement is that the agency ought to be 
looking at the whole marketplace, because if ethanol as an 
oxygenate and octane enhancer goes away where is our next 
gallon of fuel going to come from? It is going to come from 
fracking, it is going to come from tar sands which also has 
their own environmental and land use issues. And so you have 
got to look at all of this.
    Mr. Whitfield. The gentleman's time has expired. I might 
also mention that the Inspector General has initiated an 
investigation over at EPA regarding the RFS which I think looks 
like all sides are anxious for them to do what they are 
supposed to be doing over there. So I think that is probably a 
good development.
    And I will recognize myself for 5 minutes of questions and 
then--Mr. Thompson, some of your member companies are merchant 
refiners that have no blending capacity. So can you describe 
just the unique challenges those companies face in complying 
with the RFS?
    Mr. Thompson. Well, certainly their biggest challenge is 
that they are subject to the whims of the RIN market and as RIN 
prices go up their cost of compliance goes up. And so for a 
merchant refiner this is the number one compliance obstacle.
    Mr. Whitfield. OK. And Mr. Teske, Briggs & Stratton has a 
nice facility down in Murray, Kentucky, and provides a lot of 
jobs as so do our corn growers in Kentucky. And on this small 
engine issue of using fuel above E10 of ethanol content, you 
say that above E10 it does create damage to these small engines 
and primarily because of a heat issue; is that what you were 
saying?
    Mr. Teske. That is correct. So what happens, Chairman, is 
essentially we design engines that are plus or minus a standard 
and so where we design them is E5, five percent ethanol. They 
can operate from E0 to E10. We can design to whatever plus or 
minus five percent would be. The problem is a moving target. 
Our concern really comes back to the tens of millions of 
engines that are out there. In fact, there are hundreds of 
millions of engines that you include all small engines that are 
out there. They are not designed to run on anything above E10.
    And so it is these consumers who have bought, paid good 
money for a piece of equipment and now, they are not going to 
get the value and the benefit that they need. So it is the 
moving target that is the issue, but to your point, yes. For 
the legacy equipment that is out there and everything that is 
being produced today, anything above E10 will cause issues 
because of heat distorting the components, the materials that 
are in the engine, as well as the ethanol attracting water 
which causes then ultimately corrosion and bore scoring and 
things like that as it relates to the effects of corrosion on 
an engine.
    Mr. Whitfield. So do you frequently hear from owners of 
small engines? Do they come back to you as the manufacturer?
    Mr. Teske. They do. And to Congressman Welch's point when 
he went to the state fair, people don't know about the effects 
of ethanol. And we have done an awful lot of work. We have done 
here studies on do people understand what is happening to their 
engine, and they don't. They don't understand. They just look 
for the cheapest thing or they go for whatever they think they 
have been putting in for years. They have an issue. We see more 
fuel related issues. And ultimately they come back and they 
say, well, this must be a problem, Briggs isn't what they used 
to be, and in fact that is not the case. We are making arguably 
higher quality engines today than we ever have. In fact I think 
we do, we have the evidence. And ultimately we want to make 
sure they are getting the value that they paid for, and it is 
going to come back at us and they are going to blame us if 
there are issues when in fact it is a misfueling problem.
    Mr. Whitfield. Mr. Dinneen.
     Mr. Dinneen. I would just like Mr. Teske maybe to clarify 
something for me if nobody else. These problems you are seeing, 
is this with E10 or E15?
    Mr. Teske. The problems that we--if I may, Chairman?
    Mr. Whitfield. Sure.
    Mr. Teske. The problems we see is with ethanol. And so 
basically we design the engines to operate on E10, we warrant 
to E10. There are more and more fuel related----
    Mr. Whitfield. So anything----
    Mr. Dinneen. That is my point. If you warrant to E10 you 
should not expect an issue with 10 percent ethanol blended 
gasoline used in your engines. And if there is there has to be 
some other problem. Either they didn't store it and care for it 
properly or something else. But you would not expect I would 
assume that you would see a problem with E10 if everything was 
done properly.
    Mr. Teske. May I?
    Mr. Whitfield. Yes.
    Mr. Teske. This isn't an issue of E10 or caring for the 
unit properly. This is we know that when you put higher blends 
of ethanol in up to E15 it will destroy the engine. So people 
who take care of their products, no question. This isn't a 
question of whether they can use E10 or E15. E15 will harm the 
engine no matter how well you take care of it. When you go to 
E10, E0 to E10, it will operate. You take care of it, it will 
operate. We do see more fuel related issues as ethanol 
continues, but the fact is, is that our testing shows that E15 
will damage an engine.
    Mr. Dinneen. And I was not disputing the fact that E15 
should not be used in a small engine. I think the question is, 
is E15 being used in small engines today, and I think the 
overwhelming evidence would be no. As Mr. Thompson pointed out, 
E15 is only being sold at 322 stations across the country. So I 
just don't see that as driving the kind of problems that he is 
talking about. And if----
    Mr. Teske. And Chairman Whitfield, if I may?
    Mr. Whitfield. Yes.
    Mr. Teske. In my written testimony I talk about the fact 
that we see E15 in our area simply because we live in Wisconsin 
and there is a lot of corn. If you go back and look into the 
'70s and the '80s when leaded gasoline transitioned to unleaded 
gasoline, there are a lot of issues, a lot of misfueling 
problems along the way.
    We are trying to avoid that from happening again, and that 
is why as we go down in our recommendations to this is 
ultimately better education, make sure people understand, and 
make sure that there is E10 that is widely available so that 
these tens of millions of our engines and hundreds of millions 
of engines that are out there can work.
    Mr. Whitfield. Mr. Columbus, if I own a small minute market 
and I want to put in E85, what would that equipment cost me 
roughly?
    Mr. Columbus. Mr. Chairman, it will depend on where you are 
putting it and where that market is.
    Mr. Whitfield. Yes.
    Mr. Columbus. If it is in a rural area you are probably 
looking--and remember size of the outlet. If you are putting in 
a Sheetz or a Wawa it is going to be a couple, $300,000 
anywhere. If you are going to have four to six fueling 
locations you are probably looking between $50,000 and 
$100,000. But if you are looking at an outlet that small 
$50,000 to $100,000 is all the money on earth.
    Mr. Whitfield. That has--yes.
    Mr. Columbus. So unless and until somebody demonstrates 
that they can get a return on investment on that money it is 
not going to happen.
    Mr. Whitfield. OK.
    Bobby, do you have any questions?
    Mr. Rush. I think I have one question, Mr. Chairman.
    Mr. Whitfield. The gentleman from Illinois is recognized 
for 5 minutes.
    Mr. Rush. Mr. Dinneen, in your testimony earlier you cited 
the successes of the RFS program especially when it comes to 
the issue of jobs. And would you elaborate on how this policy 
has helped spur the creation of jobs and what impact would 
amending or ending this program have on employment?
    Mr. Thompson, you can jump in on this if you would. But Mr. 
Dinneen, I really want you to--jobs are critical to my 
constituents.
    Mr. Dinneen. Certainly, Congressman. The U.S. ethanol 
industry is responsible for about 380,000 direct and indirect 
jobs. Many of those jobs are in agriculture as farmers grow and 
deliver the corn. There are certainly high paying jobs, high 
tech jobs at the plants themselves.
    But what we have seen is that when an ethanol plant is 
introduced to a community it revitalizes that rural community 
with high paying jobs. I have been to ethanol plant openings 
all across the country and, you know, rural America was losing 
population. There was no economic development. An ethanol plant 
in these areas is an economic engine that revitalizes those 
areas in demonstrable ways.
    Mr. Rush. Mr. Thompson, do you have anything you want to 
add to that?
    Mr. Thompson. Well, this shouldn't be about whether we 
support jobs. Certainly we all support jobs. My industry 
supports over two million jobs. The issue is whether this 
should be congressionally mandated, right. As Mr. Dinneen says 
he has a thriving industry and that industry should be able to 
thrive on its own. It shouldn't have to rely on this, you know, 
congressional mandate. So we support the jobs.
    Mr. Rush. Thank you, Mr. Chairman. I yield back.
    Mr. Whitfield. The gentleman yields back, and that would 
conclude today's hearing. And I want to thank the witnesses for 
being with us today. As I said in the beginning, this was kind 
of a status hearing to let everybody air it out and talk about 
it from their perspective, and I think we accomplished that. So 
I want to thank you very much for your time and effort.
    Also I want to enter into the record a letter from the 
Advanced Biofuels Association; a letter for the record from 
Growth Energy; the National Farmers Union; the National Council 
of Chain Restaurants; a statement from Representative Steve 
King of Iowa.
    [The information appears at the conclusion of the hearing.]
    Mr. Whitfield. And we will keep the record open for 10 
days.
    Mr. Rush. Mr. Chairman.
    Mr. Whitfield. Yes.
    Mr. Rush. I have a report that I would like to enter into 
the record. It is the Biotechnology Innovation Organization's 
study on greenhouse gas reductions from the RFS.
    Mr. Whitfield. Yes. Without objection, we will enter that 
into the record as well.
    [The information appears at the conclusion of the hearing.]
    Mr. Whitfield. Anything else? OK.
    OK. Well, thank you all once again. We look forward to 
working with you as we move forward and appreciate your time 
very much. Thank you.
    [Whereupon, at 1:11 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Fred Upton

    This committee takes seriously its oversight duties, and 
today we will give the Renewable Fuel Standard a much-needed 
review. I welcome Environmental Protection Agency Assistant 
Administrator Janet McCabe, Energy Information Administration 
Deputy Administrator Howard Gruenspecht, as well as a cross 
section of stakeholders who will be providing their 
perspectives on this program.
    It has been 9 years since the RFS was last revised in 2007, 
and it goes without saying, much has changed since then. 
Widespread fears at the time that America was running out of 
oil have been replaced with the reality of rising domestic 
production and even the U.S. is now exporting crude oil for the 
first time in four decades. Concerns about rising gasoline 
demand have been replaced by declines in actual usage, and 
assumptions that cellulosic biofuels were just around the 
corner have been replaced with very slow development of these 
fuels. Overall, we find ourselves in a very different place 
today than anticipated when we last legislated changes to the 
RFS.
    Of course, just because circumstances have changed does not 
necessarily mean the RFS needs to be revised, but it does mean 
that we should take a careful look at the program. And no 
questions or ideas for improvements should be off the table.
    One topic that warrants serious discussion is the fate of 
the program after 2022. The law sets out the requirements 
through 2022, but afterwards it essentially gives the reins to 
EPA. I suspect many of us are concerned about having that much 
discretion in the hands of unelected bureaucrats, and now is a 
good time to start the discussion on potential changes to this 
aspect of the RFS.
    We all know that there are those who call for complete 
repeal of the RFS, and there are those who don't want any 
changes at all, even modest ones. But I can't help but think 
that if we approach this issue in a bipartisan fashion, that we 
can find a path forward for an RFS that works for all the 
parties involved--farmers, renewable fuel producers, refiners, 
automakers, power equipment makers, and most of all consumers.
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                 Prepared statement of Hon. Steve King

    I want to thank Chairman Whitfield and Ranking Member Rush 
for accepting my testimony today on the importance of 
maintaining the RFS program.
    Energy is at the heart of the American economy. Energy 
powers our homes and businesses, and it is vital that America 
has access to the most affordable and most extensive sources of 
energy possible. Moreover, our national security is also tied 
to the energy sector. If we rely on sources of energy that come 
from abroad, then we expose our nation to the whims of tyrants 
and terrorist sponsoring states. The Renewable Fuel Standard 
(RFS) was created with these goals in mind: to promote the 
development of affordable, low pollution, domestically produced 
fuel sources. Not only have these goals been met thus far, but 
the RFS and the work and innovation of our biofuels industry 
over the last few decades has allowed the fields that have fed 
the world, to fuel it as well.
    To examine further the benefits of the RFS, I want to 
highlight an academic work done by professors Dermot Hayes of 
economics and finance at Iowa State University, and Xiaodong Du 
of the Department of Agricultural and Applied Economics at the 
University of Wisconsin-Madison. Their analytical report 
entitled ``The Impact of Ethanol Production on US and Regional 
Gasoline Markets: An Update to May 2009'', showcases the 
breathtaking and positive effects that ethanol and the RFS have 
had for the American economy. Their work concluded that in 2010 
alone the effect of ethanol being blended into the fuel market 
lowered the price of the average gallon of gasoline by $0.89, 
saving Americans around $120 billion per year at the pump. They 
also concluded that if ethanol were suddenly removed from the 
fuel market altogether, the resulting gasoline price spike 
would be between 41% and 92%, crippling the US economy and 
almost certainly plunging our fragile economy back into 
recession.
    Beyond the substantial economic benefits for American 
families, a Congressional Research report from 2012 asserts 
that in the first six years after the implementation of the RFS 
oil imports declined by 33%. Furthermore, this report forecasts 
that over the next 20 years US oil imports will be less than a 
third of what they would have been expected to be prior to 
passage of the RFS. This dramatic decrease in imported oil 
helps to safeguard the national security interests of the 
United States by insulating our economy from the supply shocks 
and price volatility that is intrinsic to the world's petroleum 
market. Due to the irregularity of global production of crude 
and refined petroleum products, a reliance on these goods for 
energy exposes our nation to possible catastrophe. The oil 
crisis of the 1970s and the resulting stagflation serve as a 
warning and a reminder of the danger of relying on a 100% 
petroleum mandate. The oil crisis of the 1970s also reminds us 
of the damage that Iran, a known state sponsor of terrorism, 
can inflict on the US by manipulating their oil production. The 
RFS has tremendously reduced the amount of US dollars that have 
been sent to terrorist sponsoring nations, such as the Islamic 
Republic of Iran. There is no serious doubt that if we had the 
RFS and our present biofuels industry in the 1970s, it would 
have substantially mitigated the very serious damage to our 
economy while, at the same time, limited or even eliminated the 
Great Farm Crisis of the 1980s.
    In my home of Iowa we all know the benefits of biofuels 
that I have outlined here, but unfortunately not everyone does. 
This is why I have championed the fight to maintain the 
original volumes of biofuels in the RFS. The biofuels industry 
has created countless American jobs and has spurred economic 
growth across our country. The biofuels sector has directly 
added $5.6 billion of GDP and 62,000 jobs to the state of Iowa 
alone. In Iowa we produced about 30% of the nation's ethanol, 
saving Americans tens of billions of dollars at the pump each 
year. Furthermore, we can thank the ethanol industry for having 
reduced the annual carbon footprint of the United States by the 
equivalent of 27 million cars. It is thus imperative that the 
RFS not only continue to remain a policy of the United States, 
but one that is administered in accordance with established 
law.
    Unfortunately, this Administration, in a blatant violation 
of Congress's Article I authority and in contravention of 
established US law, has begun to alter the RFS based on biased 
and arbitrary positions. Whether or not you agree with the 
plethora of hard science and academic work that illustrates the 
positive effects of the RFS, we must stand firm against the 
abuse of the program by this administration. It is with this in 
mind that I must stand in opposition to H.R. 5180, a bill that 
would reward this administration by enshrining into law the 
very abuse that this President has committed thus far. H.R. 
5180 would grant legal cover to the EPA to continue its 
currently illegal policy of arbitrarily reducing the level of 
biofuels in America's fuel economy. The effect of this bill 
would be to undo the progress of the biofuels industry and the 
RFS thus far. The President's abuse of the program has already 
stunted economic and job growth, leaving fuel prices high, and 
our nation more susceptible to foreign manipulation of the oil 
markets. H.R. 5180 would raise the petroleum mandate to 90.3%, 
weakening the United States and increasing the probability of 
another oil and economic crisis, similar to that of the 1970s. 
H.R. 5180 would only serve to aid this President in these 
endeavors, and to weaken our nation.
    I urge Congress to preserve our Article I authority, and 
hold firm to established law. It's time to reaffirm our support 
of the RFS; a program that has improved the quality of life of 
every American, and strengthened our national security. The RFS 
has been great for Iowa and great for America. It is the only 
tool that provides market access to ethanol and other renewable 
fuels so they can be sold in competition with the petroleum 
industry, which has benefited from a century of Federal 
subsidies and support. It strengthens our national security, 
decreases our dependence on foreign sources of energy, gives 
consumers lower cost options at the pump, and creates jobs for 
Americans. To weaken, reduce, or eliminate the RFS, as HR 5180 
does, moves the US in the direction of a 100% petroleum 
mandate.
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