[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


           HIGH-OCTANE FUELS AND HIGH	EFFICIENCY VEHICLES: CHALLENGES AND 
                             OPPORTUNITIES

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

                                 HEARING

                               BEFORE THE

                      SUBCOMMITTEE ON ENVIRONMENT

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 13, 2018

                               __________

                           Serial No. 115-118
                           
                           
  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                         


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov
                        
                        
    Available via the World Wide Web: http://www.fdsys.gov
                    
                               __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
31-245 PDF                  WASHINGTON : 2018                     
          
-----------------------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Publishing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, 
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, [email protected].  



                    COMMITTEE ON ENERGY AND COMMERCE

                          GREG WALDEN, Oregon
                                 Chairman

JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
FRED UPTON, Michigan                 BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
MICHAEL C. BURGESS, Texas            ELIOT L. ENGEL, New York
MARSHA BLACKBURN, Tennessee          GENE GREEN, Texas
STEVE SCALISE, Louisiana             DIANA DeGETTE, Colorado
ROBERT E. LATTA, Ohio                MICHAEL F. DOYLE, Pennsylvania
CATHY McMORRIS RODGERS, Washington   JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi            G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas                    JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia     JERRY McNERNEY, California
ADAM KINZINGER, Illinois             PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia         BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida            PAUL TONKO, New York
BILL JOHNSON, Ohio                   YVETTE D. CLARKE, New York
BILLY LONG, Missouri                 DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana               KURT SCHRADER, Oregon
BILL FLORES, Texas                   JOSEPH P. KENNEDY, III, 
SUSAN W. BROOKS, Indiana             Massachusetts
MARKWAYNE MULLIN, Oklahoma           TONY CARDENAS, California
RICHARD HUDSON, North Carolina       RAUL RUIZ, California
CHRIS COLLINS, New York              SCOTT H. PETERS, California
KEVIN CRAMER, North Dakota           DEBBIE DINGELL, Michigan
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina

                                 7_____

                      Subcommittee on Environment

                         JOHN SHIMKUS, Illinois
                                 Chairman
DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
  Vice Chairman                        Ranking Member
JOE BARTON, Texas                    RAUL RUIZ, California
MARSHA BLACKBURN, Tennessee          SCOTT H. PETERS, California
GREGG HARPER, Mississippi            GENE GREEN, Texas
PETE OLSON, Texas                    DIANA DeGETTE, Colorado
BILL JOHNSON, Ohio                   JERRY McNERNEY, California
BILL FLORES, Texas                   TONY CARDENAS, California
RICHARD HUDSON, North Carolina       DEBBIE DINGELL, Michigan
KEVIN CRAMER, North Dakota           DORIS O. MATSUI, California
TIM WALBERG, Michigan                FRANK PALLONE, Jr., New Jersey (ex 
EARL L. ``BUDDY'' CARTER, Georgia        officio)
JEFF DUNCAN, South Carolina
GREG WALDEN, Oregon (ex officio)

                                  (ii)
                             
                             
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................     2
    Prepared statement...........................................     3
Hon. Paul Tonko, a Representative in Congress from the State of 
  New York, opening statement....................................     4
    Prepared statement...........................................     5
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................     6
    Prepared statement...........................................     7
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     8
    Prepared statement...........................................     9

                               Witnesses

R. Timothy Columbus, Counsel, National Association of Convenience 
  Stores and Society of Independent Gasoline Marketers of America    10
    Prepared statement...........................................    12
Emily Skor, Chief Executive Officer, Growth Energy...............    26
    Prepared statement...........................................    28
Dan Nicholson, Vice President of Global Propulsion Systems, 
  General Motors, on Behalf of the United States Council for 
  Automotive Research............................................    39
    Prepared statement...........................................    41
    Answers to submitted questions...............................   125
Paul Jeschke, Chairman, Illinois Corn Growers Association........    45
    Prepared statement...........................................    47
Chet Thompson, President and Chief Executive Officer, American 
  Fuel & Petrochemical Manufacturers.............................    68
    Prepared statement...........................................    70

                           Submitted Material

Letter of April 12, 2018, from Bob Dinneen, President and Chief 
  Executive Officer, Renewable Fuels Association, to Mr. Shimkus 
  and Mr. Tonko, submitted by Mr. Shimkus........................   116

 
    HIGH-OCTANE FUELS AND HIGH-EFFICIENCY VEHICLES: CHALLENGES AND 
                             OPPORTUNITIES

                              ----------                              


                         FRIDAY, APRIL 13, 2018

                  House of Representatives,
                       Subcommittee on Environment,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:00 a.m., in 
room 2123, Rayburn House Office Building, Hon. John Shimkus 
(chairman of the subcommittee) presiding.
    Members present: Representatives Shimkus, McKinley, Barton, 
Harper, Olson, Johnson, Flores, Hudson, Cramer, Walberg, 
Carter, Duncan, Walden (ex officio), Tonko, Ruiz, Peters, 
Green, McNerney, Matsui, Pallone (ex officio).
    Also present: Representative Loebsack.
    Staff present: Mike Bloomquist, Staff Director; Samantha 
Bopp, Staff Assistant; Daniel Butler, Staff Assistant; Kelly 
Collins, Legislative Clerk, Energy/Environment; Jerry Couri, 
Deputy Chief Counsel, Environment; Wyatt Ellertson, 
Professional Staff Member, Energy/Environment; Margaret Tucker 
Fogarty, Staff Assistant; Jordan Haverly, Policy Coordinator, 
Environment; Ben Lieberman, Senior Counsel, Energy; Mary 
Martin, Chief Counsel, Energy/Environment; Drew McDowell, 
Executive Assistant; Brandon Mooney, Deputy Chief Counsel, 
Energy; Dan Schneider, Press Secretary; Peter Spencer, Senior 
Professional Staff Member, Energy; Austin Stonebraker, Press 
Assistant; Hamlin Wade, Special Advisor for External Affairs; 
Jeff Carroll, Minority Staff Director; Jean Fruci, Minority 
Policy Advisor, Energy and Environment; Caitlin Haberman, 
Minority Professional Staff Member; Rick Kessler, Minority 
Senior Advisor and Staff Director, Energy and Environment; 
Jourdan Lewis, Minority Staff Assistant; Alexander Ratner, 
Minority Policy Analyst; Tim Robinson, Minority Chief Counsel; 
Tuley Wright, Minority Energy and Environment Policy Advisor.
    Mr. Shimkus. I ask all our guests today to please take 
their seats, and if we can get the doors being closed. Thank 
you.
    The Subcommittee on the Environment will now come to order, 
and the Chair now recognizes himself for 5 minutes for an 
opening statement.

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

    This subcommittee has jurisdiction over the EPA programs 
affecting transportation fuels and vehicles, most significantly 
the Renewable Fuel Standard, as well as the Corporate Average 
Fuel Economy/Greenhouse Gas standards.
    At our March 7 hearing on the future of fuels and vehicles, 
we had a chance to learn more about the trends impacting 
personal transportation in the years ahead. One takeaway was 
that, although electric vehicles will continue to make inroads, 
the internal combustion engine will still dominate the market 
for another three decades or more, as will petroleum and 
agriculturally based liquid fuels to power these engines. For 
this reason, the RFS and CAFE/Greenhouse Gas programs will 
continue to have a significant impact for years to come.
    One potential flaw with the RFS and the CAFE/Greenhouse Gas 
is that the two programs have never been fully coordinated with 
one another. The RFS doesn't necessarily give us the liquid 
fuel formulations that maximize energy efficiency, and the 
CAFE/Greenhouse Gas doesn't necessarily result in the kinds of 
engines that make the best use of the biofuel blends.
    Fortunately, there is new research underway to do better 
coordinating these programs. At the March hearing, we learned 
about DOE's Co-Optima initiative that is looking to maximize 
efficiency by using high-octane fuels and engines specifically 
designed to run on these fuels. Ideally, this could benefit 
everyone from corn growers to biofuel producers, refiners, 
automakers, and most importantly, all consumers.
    Today we seek to get the high-octane policy discussion 
underway in earnest, and I welcome our witnesses.
    High-octane fuels can improve fuel economy in engines 
optimized for them. For automakers, it is also a relatively 
low-cost tool to increase miles per gallon. And because ethanol 
is the cheapest source of octane currently available, it also 
may be a pathway to use at least as much if not more ethanol 
than under the RFS.
    But make no mistake, this is a major undertaking, and I say 
that respectfully. For one thing, we must deal with the 
proverbial chicken-and-egg conundrum. We can't expect refiners 
and gas stations to invest in new fuel unless they know that 
cars will be manufactured that will run on it. And automakers 
don't want to commit to new engines until they know that the 
fuel will be widely available. Significant investment dollars 
and a great many jobs may be at stake.
    And there are a lot of details yet to be decided, including 
exactly what the high-octane standards should be, how many 
years refiners and automakers need in order to make the 
transition, and what gas stations must do in order to provide 
this new fuel for new vehicles while still carrying the old 
fuels for existing vehicles.
    We also must figure out what other legal and regulatory 
provisions need to be revised or repealed in order for a high-
octane transition to work. And most importantly of all, we need 
to make sure that what we do is of a net benefit to consumers.
    One point I do want to emphasize: This hearing is not a 
discussion on EPA's midterm evaluation or the CAFE/Greenhouse 
Gas standards for model years 2022 through 2025. Regardless of 
the outcome of that process, we know for certain that fuel 
economy standards are going to continue increasing from where 
they are today and that automakers will need every cost-
effective option for complying. High octane is one such option 
and is worthy of serious consideration, and today I hope we can 
get a constructive dialogue underway.
    Thank you.
    And I have a minute left. Anyone seek time on the majority 
side? If not, I would like to recognize the ranking member of 
the subcommittee, Mr. Tonko, for 5 minutes.
    [The prepared statement of Mr. Shimkus follows:]

                Prepared statement of Hon. John Shimkus

    This subcommittee has jurisdiction over the EPA programs 
affecting transportation fuels and vehicles, most significantly 
the Renewable Fuel Standard as well as the Corporate Average 
Fuel Economy/Greenhouse Gas (CAFE/GHG) standards.
    At our March 7th hearing on the future of fuels and 
vehicles, we had a chance to learn more about the trends 
impacting personal transportation in the years ahead. One 
takeaway was that, although electric vehicles will continue to 
make inroads, the internal combustion engine will still 
dominate the market for another three decades or more, as will 
petroleum and agriculturally based liquid fuels to power these 
engines. For this reason, the RFS and CAFE/GHG programs will 
continue to have a significant impact for years to come.
    One potential flaw with the RFS and with CAFE/GHG is that 
the two programs have never been fully coordinated with one 
another. The RFS doesn't necessarily give us the liquid fuel 
formulations that maximize energy efficiency, and CAFE/GHG 
doesn't necessarily result in the kinds of engines that make 
the best use of biofuel blends.
    Fortunately, there is research underway to better 
coordinate these two programs. At the March hearing, we learned 
about DOE's Co-Optima initiative that is looking to maximize 
efficiency by using high-octane fuels and engines specifically 
designed to run on these fuels. Ideally, this could benefit 
everyone from corn growers and biofuels producers, refiners, 
automakers, and most important of all, consumers. Today we seek 
to get the high-octane policy discussion underway in earnest, 
and I welcome our witnesses.
    High-octane fuels can improve fuel economy in engines 
optimized for them. For automakers, it is a relatively low cost 
tool to increase miles per gallon. And because ethanol is the 
cheapest source of octane currently available, it also may be a 
pathway to use at least as much if not more ethanol than under 
the RFS.
    But make no mistake--this is a major undertaking. For one 
thing, we must deal with the proverbial chicken and egg 
conundrum--we can't expect refiners and gas stations to invest 
in a new fuel unless they know that cars will be manufactured 
that will run on it, and automakers don't want to commit to the 
new engines until they know that the fuel will be widely 
available. Significant investment dollars and a great many jobs 
may be at stake.
    And there are a lot of details yet to be decided, including 
exactly what the high-octane standard should be, how many years 
refiners and automakers need in order to make the transition, 
and what gas stations must do in order to provide this new fuel 
for new vehicles while still carrying the old fuels for 
existing vehicles. We also must figure out what other legal and 
regulatory provisions need to be revised or repealed in order 
for a high-octane transition to work. And most important of 
all, we need to make sure that what we do is of net benefit to 
consumers.
    One point I do want to emphasize--this hearing is not a 
discussion of EPA's Mid-Term Evaluation of the CAFE/GHG 
standards for model years 2022 to 2025. Regardless of the 
outcome of that process, we know for certain that fuel economy 
standards are going to continue increasing from where they are 
today, and that automakers will need every cost-effective 
option for complying. High octane is one such option and is 
worthy of serious consideration, and today I hope we can get a 
constructive dialog underway. Thank you.

    Mr. Shimkus. And I have a minute left. Anyone seek time on 
the majority side? If not, I would like to recognize the 
ranking member of the subcommittee, Mr. Tonko, for 5 minutes.

   OPENING STATEMENT OF HON. PAUL TONKO, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEW YORK

    Mr. Tonko. Thank you, Mr. Chair.
    And thank you to our witnesses for joining us this morning.
    I would like to think all of this subcommittee's hearings 
are high octane, but none more so than today's----
    Mr. Shimkus. [Groans.]
    Mr. Tonko [continuing]. It's 9 o'clock--which will focus on 
the challenges and opportunities of high-octane fuels and 
vehicle efficiency.
    Last month, we heard broadly about the future of our 
Nation's transportation fuels. We learned more about DOE's Co-
Optimization program, which is setting how to produce fuels and 
engines in tandem that will make our vehicles more efficient.
    Today's panel represents a cross-section of the 
transportation sector: refiners, vehicle manufacturers, fuel 
producers, and retailers. This hearing comes as the 
administration and some Members of Congress have considered 
changes to our existing fuels and fuel economy policies.
    Earlier this month, EPA Administrator Scott Pruitt 
determined that emission standards for model year 2022 to 2025 
light-duty vehicles should be revised. Personally, I do not 
believe this decision is justified by the technical record.
    Similarly, discussions on how to reform the Renewable Fuel 
Standard continue. In both cases, we must be mindful of the 
fact that greenhouse gas pollution from the transportation 
sector has become our Nation's largest source of emissions and 
needs to be reduced.
    Currently refiners blend additives, most commonly ethanol, 
into gasoline in order to increase its octane level. A number 
of today's witnesses will express support for a 95 research 
octane number--or RON--fuel standard, which would be similar to 
fuels sold today as premium gasoline and generally cost about 
50 cents more than regular unleaded. In theory, the standard 
would phase in over time.
    But before we sign up for an upending policy shift, we need 
to better understand the consequences of this type of change. 
Clearly, it would impact all transportation stakeholders, 
including those represented on the panel, but also, and most 
importantly, consumers.
    During any fuel transition period, I believe it is natural 
that consumers will gravitate toward the cheapest fuel option, 
as they have always done. It is critical to consider how 
consumers will deal with any potential fuel cost increase or 
confusion around misfueling.
    The other issue to consider is how an octane standard would 
interact with or displace the RFS. Obviously, there are a wide 
variety of views on the RFS. I believe in some ways it has been 
successful in achieving its stated goals and in others it has 
fallen short, particularly around the development of advanced 
biofuels production.
    In that case, the question that I will find most important 
is, Will moving to a high-octane fuel standard do a better job 
in incentivizing and creating market signals for advanced 
biofuels? I think probably not, but I am open to hearing 
otherwise.
    One success of the RFS has been the reduction in carbon 
pollution. The RFS supports fuels that are less carbon 
intensive than gasoline. But unless there are certain 
requirements, it is my understanding that a 95 RON fuel would 
not necessarily be guaranteed to use ethanol or other low-
carbon biofuels and could potentially increase the carbon 
intensity of our Nation's fuel supply.
    We should consider how best to ensure a transition to 
higher octane fuels does not permit a backslide on the gains 
that have already been made to improve air quality and reduce 
carbon emissions.
    Similarly, how would this standard interact with CAFE 
standards? There is potential for higher octane fuels, coupled 
with turbocharged engines, to help achieve fuel economy 
standards. But I don't think this can or should be done without 
the certainty that these standards will continue and continue 
to be strengthened into the future.
    I don't agree that our Nation's existing fuels and fuel 
economy programs are as problematic as some here. But I am sure 
these programs can be improved, and I am open to hearing ideas 
that seek to further the goals of these programs without 
eroding the progress that has already been made.
    Once again, I want to thank our witnesses for joining us 
this morning. I look forward to hearing your testimony.
    Mr. Chair, again, thanks for the hearing, and I yield back.
    [The prepared statement of Mr. Tonko follows:]

                 Prepared statement of Hon. Paul Tonko

    Thank you, Chairman Shimkus. And thank you to our witnesses 
for joining us this morning.
    I like to think all of this subcommittee's hearings are 
high octane. But none more so than today's, which will focus on 
the challenges and opportunities of high-octane fuels and 
vehicle efficiency.
    Last month, we heard broadly about the future of our 
Nation's transportation fuels. We learned more about DOE's co-
optimization program, which is studying how to produce fuels 
and engines in tandem that will make our vehicles more 
efficient.
    Today's panel represents a cross section of the 
transportation sector- refiners, vehicle manufacturers, fuel 
producers, and retailers.
    This hearing comes as the administration and some Members 
of Congress have considered changes to our existing fuels and 
fuel economy policies.
    Earlier this month, EPA Administrator Scott Pruitt 
determined that emissions standards for Model Year 2022-2025 
light-duty vehicles should be revised. Personally, I do not 
believe this decision is justified by the technical record.
    Similarly, discussions of how to reform the Renewable Fuel 
Standard continue.
    In both cases, we must be mindful of the fact that 
greenhouse gas pollution from the transportation sector has 
become our Nation's largest source of emissions and needs to be 
reduced.
    Currently, refiners blend additives, most commonly ethanol, 
into gasoline in order to increase its octane level.
    A number of today's witnesses will express support for a 95 
Research Octane Number, or RON, fuel standard, which would be 
similar to fuels sold today as premium gasoline and generally 
cost about 50 cents per gallon more than regular unleaded.
    In theory, this standard would phase-in over time.
    But before we sign up for an upending policy shift, we need 
to better understand the consequences of this type of change.
    Clearly it would impact all transportation stakeholders- 
including those represented on the panel, but also, and most 
importantly, consumers.
    During any fuel transition period, I believe it is natural 
that consumers will gravitate to the cheapest fuel option, as 
they have always done.
    It is critical to consider how consumers will deal with any 
potential fuel cost increase or confusion around misfueling.
    The other issue to consider is how an octane standard would 
interact with or displace the RFS.
    Obviously, there are a wide variety of views on the RFS. I 
believe in some ways it has been successful in achieving its 
stated goals, and in others it has fallen short, particularly 
around the development of advanced biofuels production.
    In that case, the question I find most important is, ``Will 
moving to a high-octane fuel standard do a better job in 
incentivizing and creating market signals for advanced 
biofuels?'' I think probably not, but I am open to hearing 
otherwise.
    One success of the RFS has been the reduction in carbon 
pollution.
    The RFS supports fuels that are less carbon intensive than 
gasoline. But unless there are certain requirements, it is my 
understanding that a 95 RON fuel would not necessarily be 
guaranteed to use ethanol or other low-carbon biofuels, and 
could potentially increase the carbon intensity of the Nation's 
fuel supply.
    We should consider how best to ensure a transition to 
higher octane fuels does not permit a backslide on the gains 
that have already been made to improve air quality and reduce 
carbon emissions.
    Similarly, how would this standard interact with CAFE 
standards?
    There is potential for higher octane fuels, coupled with 
turbocharged engines, to help achieve fuel economy standards.
    But I don't think this can or should be done without the 
certainty that these standards will continue, and continue to 
be strengthened, into the future.
    I don't agree that our Nation's existing fuels and fuel 
economy programs are as problematic as some here.
    But I am sure these programs can be improved, and I am open 
to hearing ideas that seek to further the goals of these 
programs without eroding the progress that has already been 
made.
    Once again, I want to thank our witnesses for joining us 
this morning. I look forward to hearing your testimony. And I 
yield back.

    Mr. Shimkus. The gentleman yields back his time.
    The Chair now recognizes the chairman of the full 
committee, Chairman Walden, for 5 minutes.

  OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Mr. Walden. Thank you, Mr. Chairman.
    And I want to welcome our witnesses for being here and all 
those who have been so engaged in this issue.
    The Energy and Commerce Committee takes our obligation 
seriously to get the fuels and vehicles policy right. It is 
about time.
    A vehicle and the gas it runs on is a major expense for 
households, as well as millions of small businesses, farms, and 
ranches. And the many companies that produce and sell fuels and 
vehicles employ millions of Americans, as we all know, and 
range in size from major automakers and refiners to small 
companies like Red Rock Biofuels, which is looking to help 
reduce the risk of wildfire in our forests by converting woody 
biomass into biofuel and jobs for the rural areas in my 
district in Lakeview, Oregon.
    But getting the policy right isn't always easy--I think we 
would all admit to that here--especially with complex and 
sometimes contentious issues like the Renewable Fuel Standard 
and vehicle fuel economy standards.
    Today we explore an idea to facilitate compliance with the 
RFS while also improving fuel economy. By transitioning to 
higher octane blends and vehicles whose engines are designed to 
maximize efficiency from those fuels, we could both incorporate 
more ethanol into fuel supply while also increasing miles per 
gallon.
    At first look, it seems like an elegant way to make both 
the RFS and CAFE standards work better together. Of course, 
whenever something sounds too good to be true, it very well may 
be, so we need to kick the proverbial tires of this policy idea 
before moving ahead, and that is the purpose of today's 
hearing.
    We need to be especially mindful of the consumer impacts. 
We want a policy outcome that brings down the cost of driving, 
so questions about the impact on the price per gallon at the 
pump and on sticker price of new vehicles will need to be 
addressed, as well, as will questions whether this is the most 
cost-effective means to improve fuel economy and to reduce 
emissions.
    But while looking at these concerns, we also need to 
consider the upside potential of high-octane fuels and 
vehicles. I look forward to the discussion today. And I would 
just thank the chairman of the subcommittee and others who are 
putting their shoulder to the wheel here.
    This is a priority for me. It is a priority for this 
committee. It is a priority for the country. And we intend to 
move forward one way or another. So we appreciate that you all 
take that seriously as we do, and we look forward to having 
everybody at the table and working this out this year.
    With that, I would yield back to the chairman of the 
subcommittee.
    [The prepared statement of Mr. Walden follows:]

                 Prepared statement of Hon. Greg Walden

    The Energy and Commerce Committee takes our obligation 
seriously to get fuels and vehicles policy right. A vehicle and 
the gas it runs on is a major expense for households as well as 
millions of small businesses, farms, and ranches. And the many 
companies that produce and sell fuels and vehicles employ 
millions of Americans and range in size from major automakers 
and refiners to smaller companies like Red Rock Biofuels, which 
is looking to help reduce the risk of wildfire in our forests 
by converting woody biomass into biofuel and jobs for the rural 
community of Lakeview, Oregon.
    But getting the policy right isn't always easy, especially 
with complex and sometimes contentious issues like the 
Renewable Fuel Standard and vehicle fuel economy standards.
    Today, we explore an idea to facilitate compliance with the 
RFS while also improving fuel economy. By transitioning to 
higher octane blends and vehicles whose engines are designed to 
maximize efficiency from those fuels, we could both incorporate 
more ethanol into the fuel supply while also increasing miles 
per gallon.
    At first look, it seems like an elegant way to make both 
the RFS and CAFE standards work better together. Of course, 
whenever something sounds too good to be true, it very well may 
be, so we need to kick the proverbial tires of this policy idea 
before moving ahead. That is the purpose of today's hearing.
    And we need to be especially mindful of the consumer 
impacts. We want a policy outcome that brings down the cost of 
driving. So questions about the impact on the price per gallon 
at the pump and on the sticker price of new vehicles will need 
to be addressed, as will questions whether this is the most 
cost-effective means to improve fuel economy and reduce 
emissions.
    But while looking at these concerns, we also need to 
consider the upside potential of high-octane fuels and 
vehicles. I look forward to today's serious discussion of this 
concept.

    Mr. Shimkus. The gentleman yields back the time.
    The Chair now recognizes the ranking member of the full 
committee, Congressman 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, Mr. Chairman.
    Some will say that establishing a high-octane fuel standard 
can serve as an alternative to the current Renewable Fuel 
Standard, or RFS, program. But others have very different 
viewpoints. Today we will hear both sides and review whether 
moving to a high-octane standard can satisfy enough 
stakeholders to move forward with RFS reform legislation. I 
remain skeptical.
    As with any policy, the devil is in the details, and here 
are just a few of my questions. First, at what octane level 
would we set the standard? Second, is it a performance standard 
only, or would we retain some discretion to designate clean and 
renewable fuels as a source for that octane? And third, where 
would advanced and cellulosic biofuels fit into this new 
program? Fourth, what engine modifications are necessary, and 
how quickly can they be integrated into new vehicle models? And 
fifth, how would consumers be affected? And last, how will this 
affect workers in the refining, automotive, and agricultural 
sectors?
    These answers make a big difference about how stakeholder 
groups will be impacted. Unfortunately, today's panel does not 
come close to representing everyone involved.
    Congress enacted the RFS program to diversify the fuel 
supply, reduce dependence on fossil fuels, promote rural 
development, and deliver environmental benefits. While it 
achieved many of these goals, especially in air quality, the 
record on environmental benefits of the RFS is mixed. High-
octane fuel standards may or may not deliver environmental 
benefits in terms of air quality, greenhouse gas emissions, and 
resource use.
    This is critical, particularly in light of last week's 
announcement by EPA Administrator Scott Pruitt that the Trump 
administration was going to roll back fuel efficiency standards 
for passenger vehicles and light-duty trucks. Continued growth 
of greenhouse gas emissions in the transportation sector must 
stop, and fuel economy must improve dramatically.
    A policy change that extends the dominance of fossil fuel 
use in transportation, that slows improvement in vehicle fuel 
economic standards, or keeps us on the path of increased carbon 
emissions in the transportation sector is unacceptable, in my 
opinion.
    And the current RFS program is not perfect. In the past few 
days, we learned that this administration's implementation of 
the RFS is far from perfect. I have serious concerns and 
questions about Administrator Pruitt's extensive use of secret 
waivers to allow numerous refineries, apparently of all shapes 
and sizes, to get out from their obligations under the law.
    I support the judicious use of waivers as appropriate under 
law to relieve the burden on small refiners facing real 
hardship. However, these secret waivers by Administrator Pruitt 
seem to have gone far beyond the scope of the law to include 
refineries that are neither small nor in financial distress, 
and that is absolutely not the way to address problems with RFS 
implementation.
    We must evaluate this proposal for changes to the RFS 
program against its successes and shortcomings. The RFS has 
encouraged a great deal of investment by companies and 
individuals throughout the entire transportation, agricultural, 
and biotechnology sectors.
    Without careful consideration and analysis, we risk severe 
disruption and hardship for businesses, farmers, workers, 
consumers, and the environment, and trading one set of problems 
for another is simply not progress.
    So I know this is going to be a valuable hearing. And I 
thank you, Mr. Chairman and our ranking member for doing this 
today. Thank you.
    [The prepared statement of Mr. Pallone follows:]

             Prepared statement of Hon. Frank Pallone, Jr.

    Some will say that establishing a high-octane fuel standard 
could serve as an alternative to the current Renewable Fuel 
Standard (RFS) program. Others have very different viewpoints. 
Today we will hear both sides and review whether moving to a 
high-octane standard can satisfy enough stakeholders to move 
forward with RFS reform legislation. I remain skeptical.
    As with any policy, the devil is in the details. Here are 
just a few of my questions:
     At what octane level would we set the standard?
     Is it a performance standard only or would we 
retain some discretion to designate clean and renewable fuels 
as the source for that octane?
     Where would advanced and cellulosic biofuels fit 
into this new program?
     What engine modifications are necessary and how 
quickly can they be integrated into new vehicle models?
     How would consumers be effected?
     How will this affect workers in the refining, 
automotive, and agricultural sectors?
    These answers make a big difference about how stakeholder 
groups will be impacted. Unfortunately, today's panel does not 
come close to representing everyone involved.
    Congress enacted the RFS program to diversify the fuel 
supply, reduce dependence on fossil fuels, promote rural 
development and deliver environmental benefits. While it 
achieved many of these goals, especially in air quality, the 
record on environmental benefits of the RFS is mixed. High-
octane fuel standards may or may not deliver environmental 
benefits in terms of air quality, greenhouse gas emissions, and 
resource use.
    This is critical, particularly in light of last week's 
announcement by EPA Administrator Scott Pruitt that the Trump 
administration was going to roll back fuel efficiency standards 
for passenger vehicles and light duty trucks. Continued growth 
of greenhouse gas emissions in the transportation sector must 
stop, and fuel economy must improve dramatically. A policy 
change that extends the dominance of fossil fuel use in 
transportation, that slows improvement in vehicle fuel economy 
standards, or keeps us on a path of increased carbon emissions 
in the transportation sector is unacceptable.
    The current RFS program is not perfect. And, in the past 
few days, we've learned that this administration's 
implementation of the RFS is far from perfect.
    I have serious concerns and questions about Administrator 
Pruitt's extensive use of secret waivers to allow numerous 
refineries--apparently of all shapes and sizes--to get out from 
their obligations under the law. I support the judicious use of 
waivers as appropriate under law to relieve the burden on small 
refiners facing real hardship. However, these secret waivers by 
Administrator Pruitt seem to have gone far beyond the scope of 
the law to include refineries that are neither small nor in 
financial distress. That is absolutely not the way to address 
problems with RFS implementation.
    We must evaluate this proposal for changes to the RFS 
program against its successes and shortcomings. The RFS has 
encouraged a great deal of investment by companies and 
individuals throughout the entire transportation, agricultural, 
and biotechnology sectors.
    Without careful consideration and analysis, we risk severe 
disruption and hardship for businesses, farmers, workers, 
consumers, and the environment. Trading one set of problems for 
another is not progress.
    Thank you, I yield back.

    Mr. Shimkus. I thank the gentleman.
    We now conclude with Members' opening statements. The Chair 
would like to remind Members that, pursuant to committee rules, 
all Members' openings statements will be made part of the 
record.
    We want to thank all of our witnesses for being here today 
and taking the time to testify before the subcommittee. Today's 
witnesses will have the opportunity to give opening statements 
followed by a round of questions from Members. So we will just 
begin.
    First, I would like to recognize Mr. Timothy Columbus, 
general counsel, Society of Gasoline Marketers of America and 
the National Association of Convenience Stores.
    Sir, you have 5 minutes. Your full testimony is in the 
record, and you are now recognized.

     STATEMENTS OF R. TIMOTHY COLUMBUS, COUNSEL, NATIONAL 
 ASSOCIATION OF CONVENIENCE STORES AND SOCIETY OF INDEPENDENT 
  GASOLINE MARKETERS OF AMERICA; EMILY SKOR, CHIEF EXECUTIVE 
OFFICER, GROWTH ENERGY; DAN NICHOLSON, VICE PRESIDENT OF GLOBAL 
  PROPULSION SYSTEMS, GENERAL MOTORS, ON BEHALF OF THE UNITED 
STATES COUNCIL FOR AUTOMOTIVE RESEARCH; PAUL JESCHKE, CHAIRMAN, 
ILLINOIS CORN GROWERS ASSOCIATION; AND CHET THOMPSON, PRESIDENT 
  AND CHIEF EXECUTIVE OFFICER, AMERICAN FUEL & PETROCHEMICAL 
                         MANUFACTURERS

                STATEMENT OF R. TIMOTHY COLUMBUS

    Mr. Columbus. Thank you, Mr. Chairman. My name is Tim 
Columbus. I am from the law firm of Steptoe & Johnson. I appear 
today on behalf of our clients, the National Association of 
Convenience Stores and the Society of Independent Gasoline 
Marketers of America. These associations represent over 80 
percent of retail fuel sales in the United States.
    As a result of--as Mr. Tonko knows, my favorite term is 
``the big stupid price signs''--that market is the most 
transparent and price competitive commodities market on the 
face of the earth.
    Simply stated, retailers want to sell products in a legal 
way to people who want to buy them. They don't buy them because 
we sell them. We sell them because they want them.
    Because they do not manufacture the products they sell, 
they favor, as do all buyers, deep, diverse markets behind them 
from which they can obtain supplies. And in that context I 
should comment that the RFS has, in fact, diversified the 
market from which our members purchase product.
    As I told Chairman Shimkus and Ranking Member Tonko at 
their first roundtable on this issue, retailers seek peace in 
the valley. We believe that the concept that is being proposed 
today offers, perhaps, a path to achieve that objective.
    Implementing a program in which all new cars would be 
required to run on higher octane fuels, fundamentally a 
performance standard, would have the following salutary 
effects, in our opinion.
    Number one, consumers would benefit from, A, higher 
mileage, and B, that the costs of fuels would be driven down 
based on the economic advantage of their component parts. Today 
the cheapest octane on earth is, in fact, ethanol. I believe 
this opens a substantial opportunity for ethanol and that that 
can, in fact, lower the cost of motor fuels overall.
    Number two, the environment would benefit from decreased 
auto emissions. High-compression engines are more efficient, we 
get better mileage, and we spew less stuff into the air. It is 
a technical term, ``stuff.''
    Fuel marketers would benefit from a continued and evolving 
diversity in supply, which will drive down their costs and, 
therefore, the costs of their customers. I believe fuels' 
manufacturers would benefit from their increased ability to 
supply products which are marketed based on their economic 
efficiencies in relevant markets, rather than based on a 
formulaic approach.
    For retailer marketers in particular, the specific benefits 
of this approach, I think, are the following. The change in the 
product mix would occur over time. That results in, at least at 
the outset, minimal if any need to modify existing 
infrastructure. RON 95 is in the market today, and it is 
available at virtually every retail outlet in the United 
States.
    By assuring an ever-increasing market for those new fuels, 
marketers will be in a position to make a decision to invest 
knowing that there is a guaranteed demand for the product that 
requires the investment and that they will be able to achieve 
an economic return.
    By opening the market to new fuels and properly allocating 
responsibility for compliance amongst manufacturers, marketers, 
and consumers, retailers will have the option of introducing 
new fuels to the market to meet consumers' demand for those 
fuels.
    In conclusion, NACS and SIGMA believe the concept being 
discussed today offers all the stakeholders in this debate the 
benefit of going forward based on a performance rather than a 
formulaic standard.
    I have been around some of you for a while. It has been my 
experience that, when manufacturers face a performance 
standard, it is the instance in which the great American 
competitive genius has produced the best economic results for 
the consumers and all of us who serve them.
    We congratulate the subcommittee for holding this hearing. 
We urge you to move forward in an effort to alleviate the 
ongoing plague of industry squabbles and enhance the interests 
of fuel consumers in obtaining the most cost-effective fuels 
for their vehicles.
    Thank you. I am happy to answer any questions that these 
comments or my statement may have raised for you.
    [The prepared statement of Mr. Columbus follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Shimkus. The gentleman yields back time. The Chair 
thanks the gentleman.
    The Chair now recognizes Emily Skor, chief executive 
officer of Growth Energy.
    Welcome. You are recognized for 5 minutes.

                    STATEMENT OF EMILY SKOR

    Ms. Skor. Good morning, Chairman Shimkus, Ranking Member 
Tonko, and members of the subcommittee. Thank you for the 
opportunity to discuss the contributions of ethanol to high-
octane fuels and future vehicle fuel economy standards.
    My name is Emily Skor, and I am the CEO of Growth Energy, 
America's leading biofuels trade association, proudly 
representing 89 producers, 83 technology innovators in the 
supply chain, and tens of thousands of supporters across the 
country, including in Illinois. We work to bring consumers 
better choices at the pump, grow America's economy, and improve 
the environment for future generations.
    Ethanol is a homegrown biofuel that is now blended into 97 
percent of standard gasoline, meeting more than 10 percent of 
our motor fuel needs. Ethanol-blended fuels have the highest 
octane of any available liquid alternative and allow for 
better-performing engines that deliver greater fuel efficiency.
    American biofuels are ready to move America forward. With a 
stable policy and access to drivers, we can deliver low-carbon, 
low-cost, high-performing, sustainable vehicle fuel solutions.
    Congress recognized the need for a more diverse and stable 
fuel supply and enacted the Renewable Fuel Standard to drive 
innovation and investment in renewable biofuels and open access 
to the marketplace. This energy policy is successfully driving 
advances in cellulosic ethanol, with plants operating at 
commercial scale, converting corn kernel fiber, corn stover, 
wood waste, and other biomass feedstocks into high-value 
energy.
    To continue our progress and fulfill congressional goals, 
U.S. consumers must have greater access to alternative fuel 
choices at the pump. Growth Energy has been working with fuel 
retailers to build the marketplace for fuel with higher blends 
of ethanol, such as E15 and E85, as well as install the 
infrastructure that can be used for high-octane midlevel 
ethanol blends, such as E30.
    Today, low-cost higher blends are available at thousands of 
gas stations around the country. Consumers have already driven 
4 billion miles on E15 and are ready to use this fuel 
nationwide year-round.
    As fuel economy standards become increasingly stringent in 
the U.S. and worldwide, auto manufacturers are working toward 
more efficient engines that require high-octane fuels to 
operate effectively and lower greenhouse gases. Ethanol is a 
ready solution. With a natural 113 octane, ethanol has a lower 
carbon content than the gasoline components it replaces and 
provides increased engine efficiency to reduce greenhouse gas 
and criteria pollutant emissions.
    Growth Energy has been a leader in pushing for higher 
octane midlevel ethanol blends. We submitted the first proposal 
for a 100 RON E30 fuel nearly 7 years ago.
    Robust research by national labs, automakers, and other 
scientific institutions has explored the myriad benefits of 
high-octane fuels and specifically a midlevel blend in the E20 
to E30 range. When paired with various higher compression ratio 
engines, these fuels increase vehicle engine efficiency, lower 
tailpipe emissions, and increase use of renewable fuel.
    There have been recent discussions about moving to solely a 
95 RON or 91 octane fuel standard. While we applaud any move to 
higher octane fuels, a 95 RON could easily be met with today's 
premium gasoline and there would be little to no incentive for 
oil refiners to move to higher biofuel blends. The past decade 
has shown oil companies will actively ignore economic 
incentives just to prevent market entry of higher ethanol 
blends.
    We cannot assume that such a modest increase in octane will 
drive growth in demand for American-made biofuels and 
agriculture without the access to market provided by the RFS. 
Only by coupling a stable RFS to maintain market access with a 
significant boost in octane from a midlevel ethanol blend can 
consumers realize significant cost savings, increased engine 
efficiency, and substantial environmental benefits.
    Biofuels must be part of any long-term plan for engine 
efficiency and greenhouse gas reduction. However, any 
discussion of our future fuel mix cannot turn back the clock on 
the RFS. We cannot support a modest move in octane at the 
expense of one of the most successful domestic energy policies 
and the only legislated carbon reduction program.
    Thank you for the opportunity to testify, and I am happy to 
answer any questions.
    [The prepared statement of Ms. Skor follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Shimkus. Thank you.
    The Chair how recognizes Mr. Dan Nicholson, vice president, 
Global Propulsion Systems, General Motors, on behalf of the 
United States Council for Automotive Research.
    You are recognized for 5 minutes.

                   STATEMENT OF DAN NICHOLSON

    Mr. Nicholson. Chairman Walden, Chairman Shimkus, Ranking 
Member Pallone, and Ranking Member Tonko, and members of the 
committee, my name is Dan Nicholson, vice president of Global 
Propulsion Systems for General Motors Company. I am here today 
representing General Motors, a member company of the United 
States Council for Automotive Research, U.S. CAR. I appreciate 
the committee's invitation to appear before you to discuss the 
importance of increased octane in gasoline.
    As you know, the automotive industry is changing at an 
unprecedented pace. This requires all major mobility 
stakeholders to be better coordinated and to develop 
implementation strategies together.
    As the committee explores options, such as changes to U.S. 
fuel standards that may include higher octane gasoline, it is 
necessary that the industries involved in this opportunity work 
more closely together in order to ensure that consumers benefit 
and our industries remain strong.
    We believe increasing the minimum octane level in U.S. 
gasoline for new vehicles will be a win for all industries and, 
most importantly, consumers.
    Today you will hear from many stakeholders involved in 
changing the liquid fuel market. This change requires the 
commitment of all parties. I would now like to take a few 
minutes to discuss the role of the automotive industry.
    Currently, many facets of the traditional automotive 
business are being disrupted. Innovative technologies are 
driving tremendous advancements in everything from safety and 
vehicle connectivity, to fuel efficiency and electrification.
    Additionally, societal trends, like urbanization and 
sustainability, are changing the way customers think about and 
interact with mobility. As GM's chairman and CEO, Mary Barra, 
likes to say, ``The auto industry will change more in the next 
5 years than it has in the last 50 years.'' We believe this 
gives us opportunity to make cars cleaner, safer, smarter, more 
efficient, and more fun to drive than ever before.
    As part of this significant shift, the automotive industry 
has taken unprecedented steps to improve engine efficiency 
through downsized turbocharged engines, improved multispeed 
transmissions, and a host of eco-friendly improvements, all 
with the goal of meeting customer requirements while delivering 
improved efficiency.
    The global automotive market is growing, and multiple 
technologies and solutions will be needed to match demand. 
Octane is one of those solutions. We have an opportunity to 
play a large role in offering consumers the most affordable 
option for fuel economy improvement and greenhouse gas 
reduction.
    We believe a higher efficiency gasoline solution with a 
higher research octane number, or RON, is very important to 
achieving this.
    U.S. CAR research shows that 95 RON makes sense from the 
viewpoints of both refiners and fuel retailers. As you may 
know, this is the same level of RON that Europe has used as 
their minimum level for many years. Without this new fuel, we 
will continue to endure the impacts of fuel variation and 
forego related available fuel economy improvement 
opportunities.
    Ultimately, policy leadership is key to bringing about 
fundamental change in the market. Your leadership is critical 
here. We need to work together to improve the fuel in the U.S. 
market to take advantage of engine designs that are more 
efficient and provide significant large-scale fuel economy 
improvements and corresponding reductions in greenhouse gas 
emissions. And we must do so in a way that makes sense for 
consumers, which means developing a favorable consumer model 
for fuel and coordinated retail introduction.
    Thank you again for the opportunity to be here today and to 
discuss the advantages of high-octane fuels used in high-
efficiency vehicles.
    [The prepared statement of Mr. Nicholson follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Shimkus. Thank you very much.
    Now I would like to recognize Mr. Paul Jeschke, testifying 
on behalf of the Illinois Corn Growers Association.
    We want to welcome you. You are recognized for 5 minutes.

                   STATEMENT OF PAUL JESCHKE

    Mr. Jeschke. Thank you, Chairman Shimkus, Ranking Member 
Tonko. Thank you for inviting me here to speak about what high-
octane fuel can do for America's farmers.
    As a corn farmer from the village of Mazon, Illinois, I 
never imagined that I would be sitting in this chamber in our 
Nation's Capital talking about corn-based higher octane fuels.
    A growing body of evidence shows that high-octane midlevel 
ethanol blends offer the most environmentally friendly and 
cost-effective route to increased vehicle efficiency and lower 
greenhouse gas emissions.
    High-octane gasoline derived solely from hydrocarbons is 
dirtier and more costly. Today's premium fuels can cost 40 to 
80 cents a gallon more than regular unleaded gasoline.
    Consumers deserve an affordable high-octane choice at the 
pump. Ethanol is simply the most cost-effective octane additive 
available in the marketplace.
    A midlevel ethanol blend consists of 25 to 30 percent 
ethanol. Splash-blend that in today's regular gasoline blend 
stock and you would end up with an octane rating of 98 to 100 
RON, higher than today's premium. This fuel would enable more 
efficient vehicles and lower greenhouse gas emissions.
    High-octane midlevel ethanol blends mean lower costs for 
both refiners and consumers. These fuels could be made by 
splash-blending ethanol into existing regular gasoline blend 
stock with no change at the refinery. These blends would reduce 
upstream greenhouse gas emissions because ethanol is less 
carbon intensive, and it would improve air quality as ethanol 
displaces harmful air pollutants from aromatic hydrocarbons.
    Given our trend line gains in corn yields, I believe we can 
meet the future demand for corn-based ethanol on the land that 
we are farming now. Farmers are growing more corn, or more 
octane, per acre now than ever before.
    The growth of corn ethanol production has done more to 
bring profitability to corn farmers than any of the many 
Government support programs which I have experienced. And 
ethanol's development was financed to a large extent with 
farmer investment. This profitability allowed many young people 
to return to the farm, including my nephew, in my case.
    But domestic ethanol use has stagnated and our 
profitability is again collapsing. Since 2014, Illinois farm 
profit has been dismal. This projects a bleak future for all of 
us, but especially these younger farmers.
    What can be done? The answer seems clear to me. As our 
vehicles of the future need higher octane, cleaner-burning 
fuel, we should look to higher blends of ethanol. Our Nation's 
fueling infrastructure can already accommodate midlevel ethanol 
blends, and with only minor investments the needed fueling 
infrastructure could be readily available nationwide, similar 
to that of diesel fuel.
    Unfortunately, the EPA regulations are stifling both fuel 
and engine innovations, preventing consumers from enjoying the 
performance benefits and fuel savings of midethanol blends. 
Until these barriers are addressed, it is simply not true that 
a minimum octane standard would provide the biofuel industry 
with the opportunity to expand its market share.
    For ethanol to be free to compete in the market on the 
basis of its value as an octane enhancer, the EPA's 
anticompetitive regulations must be corrected.
    Some of these regulatory concerns are the same RVP 
standards for all fuels containing at least 10 percent ethanol, 
which may have happened yesterday: a new high-octane, midlevel 
ethanol alternative certification fuel, such as a 98 to 100 
E25; a fuel economy equation that does not penalize ethanol 
blends; a technology-neutral fuel economy and GHG regulatory 
scheme that treats all alternative fuels alike to the extent 
that they reduce petroleum consumption and greenhouse gas 
emissions; an accurate lifecycle analysis of the greenhouse gas 
benefits of corn ethanol, like those that the USDA and the 
Department of Energy have already developed.
    EPA could address these issues through regulation, without 
the need for new legislation.
    In addition, automakers should warranty new vehicles for 
ethanol concentrations of up to 25 percent, similar as BMW has 
already done for some of their vehicles.
    Removing these barriers would clear the road for high-
octane, high-efficiency vehicles. More details on these points 
and other observations and suggestions are covered in the 
written testimony that I have submitted.
    I am proud of what we do on my family's farm. I am proud 
that our corn crop can have a part to play in the high-octane 
future that is heading our way if we are allowed to do so. 
America's corn farmers are ready to do our part to deliver.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Jeschke follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Shimkus. Thank you very much for joining us today.
    And now I would like to turn to Mr. Chet Thompson, 
president and CEO of the American Fuel and Petrochemical 
Manufacturers.
    Sir, your full statement is in the record. You have 5 
minutes.

                   STATEMENT OF CHET THOMPSON

    Mr. Thompson. Thank you, Chairman Shimkus, Chairman Walden, 
Ranking Member Tonko, members of the subcommittee. Thank you 
for the opportunity to bat cleanup this morning and provide the 
AFPM's views on this important subject of higher octane fuel.
    As you mentioned, my name is Chet Thompson. I am the 
president and CEO of the American Fuel and Petrochemical 
Manufacturers, AFPM. We believe we are uniquely qualified to 
weigh in on this topic as we represent the U.S. refining 
industry and supply virtually all of the gasoline used in the 
country today. So I will use my limited time to focus on a few 
aspects of my written testimony.
    First, AFPM is absolutely intrigued by the possibilities 
and opportunities that could be afforded by a higher octane 
fuel. Such fuels, as you mentioned, Mr. Chairman, could be a 
solution to the RFS that works for all stakeholders.
    Again, also as you mentioned, today's hearing comes at a 
critical time for the U.S. fuel and automotive sectors. The 
auto industry faces enormous challenges to comply with CAFE 
while at the same time meeting consumer preferences. The 
refining industry is dealing with an inefficient and unworkable 
Renewable Fuel Standard that is only going to get worse with 
time.
    Fuel marketers in the biofuel industry don't have it easy 
either, to be sure. They are faced with constant uncertainty 
and never-ending debates about the RFS, making for a very 
challenging business environment.
    Again, these uncertainties will grow worse with every 
moment we move closer to 2022 when EPA takes over this program. 
But we believe there is a potential solution for all of this: 
higher octane fuel.
    If done correctly--and by that I am going to get into what 
``done correctly'' means in a minute--higher octane fuel has 
the potential to make life better for everyone at this table 
and in this room.
    Over the last few years, we have been evaluating the 
benefits of various octane levels. Our detailed analysis show 
that a 95 RON performance standard could be an efficient and 
affordable option to reduce emissions and meet the needs of the 
auto sector.
    A 95 RON standard would help auto companies, as Mr. 
Nicholson said, comply with CAFE by meaningfully improving the 
efficiency of the internal combustion engine. By our estimates, 
95 RON would reduce greenhouse gas emissions in this country by 
the equivalent of putting 720,000 EVs on the road each year.
    So let me put that number in perspective. In 2016, 200,000 
EVs were sold globally. So we are talking about tripling that 
year after year through 95 RON. And if you look at figure 3 on 
page 9 of my testimony, you can see that 95 RON is the lowest-
cost fuel option for making these gains. Ninety-five RON is the 
lowest cost option for consumers.
    So finally it also has the benefit, 95 RON, of being 
available and scalable nationwide on the timeline needed by the 
auto industry. No other octane level can make this claim, not a 
single one.
    So we believe a 95 RON would be good for the ethanol 
industry, as well. I am sure they appreciate me saying that. We 
would expect it to provide them with every bit as much ethanol 
demand as they get under the RFS, and likely more. This is true 
for a simple reason, because ethanol at the moment is a low-
cost source of octane. So it follows that they would thrive 
under a high-octane performance standard, one done under the 
free market and not through Government mandate.
    Fuel marketers would benefit, as well, as Mr. Columbus 
said. A fuel-neutral 95 RON performance standard would provide 
marketers with optionality and flexibility. Importantly, this 
would translate to the benefit of consumers by creating a 
transparent and competitive market for all liquid fuels.
    Finally, my members would certainly benefit, as well. 
Sunsetting the RFS and transitioning to a 95 RON performance 
standard would end mandates, reduce overall compliance burdens, 
and provide achievable regulatory targets.
    So such a standard would require enormous investments from 
my industry. Tens of billions of dollars would be needed. So we 
certainly don't take this hearing lightly.
    We are, however, willing to entertain it for one simple 
reason: frankly, as a compromise solution to the RFS that we, 
again, believe could work for all stakeholders.
    But for it to make sense to us, frankly, under any 
circumstances a 95 RON standard would have to include three 
elements. First, it would have to be accompanied by a sunset of 
the RFS. The refining industry simply can't comply with the 
burdens of the RFS at the same time making investments to bring 
95 RON to market. Second, it would have to be implemented over 
a reasonable period of time. And third, it must include 
measures to prevent misfueling.
    As to the latter, we are certainly in a process now to 
evaluate all the obstacles that would be brought about by 
bringing a new fuel to market. We are working on that. These 
issues are real. But the good news is, through our analysis so 
far we don't think any of these obstacles are insurmountable.
    So in conclusion, AFPM believes that higher octane fuel has 
the potential to better harmonize our country's fuel and 
vehicle policies, and for that reason we believe it deserves 
further consideration and analysis.
    We thank you, Mr. Chairman, for the opportunity to be here 
today.
    [The prepared statement of Mr. Thompson follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Shimkus. Thank you very much. I appreciate everybody's 
testimony.
    To my colleagues on the subcommittee, welcome to my world. 
I believe that we are closer than people think. And I want to 
encourage my colleagues to really help now dig into this issue 
specifically so we can address and work through some of these 
concerns.
    Having said that, I would like to recognize myself 5 
minutes for my first round of questions.
    For all you all--that is what we say in southern Illinois, 
``all you all''--this hearing is more about the high-octane 
concept overall and less about debating the specifics, such as 
where that number should be set. So without advocating for a 
specific number, can each of you sketch out what you need in 
order for high-octane fuels to work for you and your member 
companies?
    Tim.
    Mr. Columbus. We believe there are a couple things that we 
would have to have. Number one, we would have to have a 
regulatory regime that guaranteed retailers who complied with 
warnings, signage standards, that if a motorist introduced the 
wrong fuel into his new vehicle the Environmental Protection 
Agency would not be holding the retailer accountable for that.
    When we went from leaded to unleaded gasoline retailers 
were prosecuted by EPA if consumers put leaded gasoline in a 
vehicle meant for unleaded. That has got to change for us.
    Number two, we would think it would be crucial that the 
one-pound waiver Reid vapor pressure requirements afforded E10 
be extended to any blend of fuels that has an RVP equal to or 
less than E10.
    And finally--and others can speak to this as well--I would 
hope that you could do something to accelerate the approval 
process for new gasolines. I think it took 3 years to do E15. 
If we are going to go to higher blends--and I anticipate that 
over time we would go to higher blends than just E10, E15--I 
think the market will end up demanding more than 95 RON. 
Ninety-five 95 RON is a floor for us, not a cap.
    Mr. Shimkus. Ms. Skor.
    Ms. Skor. Thank you. I would have to echo much of what Mr. 
Columbus said in that, yes, first and foremost, the ability to 
sell a legal fuel such as E15 year-round and any blends above 
10 percent year-round is going to be absolutely paramount 
because you look at that today, and that is really the largest 
impediment to much further market adoption of E15.
    I would second that the approval process of new fuels has 
been very slow and cumbersome, so that, too, is something that 
you would want to see expedited, again in continuance of this 
quest for a free market and access to the consumer in the 
marketplace.
    And importantly, any discussion of high octane--and I 
appreciate how much ethanol is recognized as the cheapest 
octane source on the planet. Having said that, if you look at 
the last decade of market behavior and dynamics, refiners do 
walk away from that economic source of octane due to 
competition. And so we would like to see and we would need to 
see that there is a designation that that high-octane source is 
renewable fuels as the source of octane.
    Mr. Shimkus. Mr. Nicholson.
    Mr. Nicholson. We need one national standard for the fuel. 
That is important to us. And we would like to be part of making 
sure the specifications are correct and that it is interrelated 
with emissions criteria. But one national standard, I think, is 
what we are seeking.
    Mr. Shimkus. Mr. Jeschke.
    Mr. Jeschke. Well, as a supplier of the raw materials for 
ethanol, corn farmers are ready to do their part. We have got 
piles of corn all over this country right now on the ground 
yet. That is how much of a surplus of that commodity we have. 
Those are being picked up now.
    But, again, the raw material that we are providing can 
easily be geared up. What we are growing naturally yields about 
1 percent a year, and so I think we can do our part.
    Mr. Shimkus. Mr. Thompson.
    Mr. Thompson. We need the RFS to sunset. We cannot do both 
high-octane fuel and the RFS.
    Mr. Shimkus. Great. Thanks.
    For Growth and the corn growers, would you support any 
level of stringency that gives you at least as much ethanol 
that you currently use today?
    Ms. Skor. So I think if the conversation is simply high-
octane standards, that is a wonderful thing that we should be 
moving toward as a country. If the conversation is a high-
octane standard coupled with some change to the RFS, that is a 
different conversation.
    If you look at the market potential that is the 
congressional intent of the RFS, 90 percent of our market 
access is yet to come, and that is on the advanced side. So 
importantly, one of the things that we get that we have 
provided with the market access of the Renewable Fuel Standard 
is that innovation and that drive toward use of----
    Mr. Shimkus. My time is about ready to expire, and I want 
Mr. Jeschke to get a chance to answer. But you didn't answer 
the question on stringency.
    So, Mr. Jeschke.
    Mr. Jeschke. We are wanting to grow the market. Again, I 
talked about the piles of corn we have. So we are wanting to 
grow our share of the fuel market ethanol production. We think 
it is good for farmers and good for the environment.
    Mr. Shimkus. Great. Thank you very much.
    The Chair now recognizes the ranking member of the 
subcommittee, Mr. Tonko, for 5 minutes.
    Mr. Tonko. Thank you.
    Mr. Thompson, if the RFS is replaced with the high-octane 
standard, as you suggest, it is my understanding that there are 
other petrochemical-derived chemicals that could be blended 
into gasoline to achieve the octane rating of premium fuel. Is 
that correct?
    Mr. Thompson. Yes, that is correct. Gasoline is a blend, 
and there are lots of blends that have octane in it. But our 
analysis shows, if we went to a 95 RON standard, ethanol would 
continue to be the dominant source of octane.
    Mr. Tonko. Right. OK. But some refineries might choose to 
meet the octane standard with an additive other than ethanol. 
Would that be an option in the absence of the RFS program's 
mandate or some other requirement to blend renewable fuel with 
gasoline?
    Mr. Thompson. Certainly that would be an option provided it 
can be done consistent with air quality and their local 
permitting, which absolutely our modeling shows that there 
would be no environmental detriment due to other sources of 
octane being used.
    Mr. Tonko. Thank you.
    I would point out that, when Congress mandated a 
performance standard to increase the oxygenate content, the 
industry used MTBE to achieve this standard, and we ended up 
with a terrible drinking water pollution problem. So before we 
open the door to increased blending with other additives, I 
would like to know what risks might be involved in making that 
decision.
    Ms. Skor, the RFS program was intended to reduce petroleum 
use and to increase the use of renewable fuels. If renewable 
fuels are no longer specified and we replace the RFS with a 
high-octane standard set at 95 RON levels, what is the impact 
on the overall demand for renewable fuel?
    Ms. Skor. Well, there would be no impact on the overall 
demand. I mean, as has been stated by the other panelists, a 95 
RON is a 91 premium fuel. It is currently sold on the 
marketplace, often with a 10 percent ethanol blend. So if we 
move to a national standard of 91 there would be little to no 
incentive to further use biofuels in our national 
transportation mix.
    Mr. Tonko. So what might this mean for the development of 
advanced biofuels and for the transition to greater use of 
cellulosic biofuels?
    Ms. Skor. Well this would eviscerate really all of the 
innovation and investment that has taken place so far, if you 
look at advanced biofuels. Just a few years ago, when the RFS 
blending targets were put on hold, we as a Nation lost billions 
of investments in next-generation technology because of the 
lack of certainty that these fuels that I will say contribute 
90-plus percent greenhouse gas reduction--the uncertainty that 
there would be no market for them in the U.S.
    Mr. Tonko. As we have discussed, the Department of Energy, 
in collaboration with vehicle manufacturers, has been exploring 
the optimal combination of high-octane fuels with advanced 
high-compression engines, the Co-Optima study. My understanding 
is the octane levels they are working with are 95 or 96 octane 
or 100 RON, and that the source of octane is presumed to be 
renewable fuels at blends that are E25 to perhaps E30. Is that 
correct, Ms. Skor?
    Ms. Skor. Yes, that is correct. And that program is similar 
to a large body of work that is examining the sweet spot, if 
you will, in an E20 to an E30 blend where you are optimizing 
the cost savings for consumers coupled with that 90 percent 
greenhouse gas reduction that you are going to be getting--or 
excuse me, the greater greenhouse gas reduction--and the 
reduced tailpipe emissions.
    Mr. Tonko. Thank you.
    And, Mr. Columbus, you and I have discussed that, when it 
comes to fuels, there is one thing consumers care about above 
all else, and that is the price.
    Mr. Columbus. Yes, sir.
    Mr. Tonko. I imagine during the transition to a 95 RON fuel 
standard there will be some new vehicles that will require 
something similar to today's premium fuel and many existing 
vehicles which continue to opt for the cheapest option. How do 
you envision consumer acceptance of a requirement to buy more 
expensive fuel?
    Mr. Columbus. Well, first of all, let's talk about premium 
gasoline prices today as opposed to regular-grade gasoline. It 
is a specialty product, Mr. Tonko. It is like going someplace 
and trying to get ethanol-free gasoline. People pay a premium 
for it because there is very narrow demand for it today.
    Having said that, I envision that a 95 RON, if it is 
coupled with a waiver of the one-pound waiver for higher blends 
of ethanol, you are going to see prices come down on that 
product. Why? Because ethanol is, in fact, the cheapest 
product.
    Something I want you to always remember, Mr. Thompson's 
members are important to us, but they are not the only source 
of blend stocks on the face of the earth. If, in fact, there 
are cheaper forms of blend stock, my clients will do so. Many 
of them today have introduced E15. Why? Because it is cheaper 
in the retail market because of the ethanol component. So that 
ability to use increased amounts.
    There is, however, a cap on that, and that is you have to 
have an infrastructure that will handle it, sir. And today 
EPA's rules say if it is not certified to hold a higher blend 
than E10, not warranted, and a retailer cannot affirmatively 
demonstrate that that equipment is compatible, and it goes back 
to the MTBE stuff, he has violated the Resource Conservation 
Recovery Act. So prices will come down because component prices 
will come down.
    Mr. Shimkus. The gentleman's time has expired.
    The Chair now recognizes the chairman of the full 
committee, Mr. Walden.
    Mr. Walden. Thank you very much, Mr. Chairman. And I very 
much appreciate your willingness to chair this subcommittee and 
take on this issue. I know how much fun it must be for you 
being conflicted with all these things. But you are doing a 
great job, and we appreciate it.
    To everybody on the panel, in one capacity or another you 
are all involved in the Renewable Fuel Standard or you wouldn't 
be before us today. Can I get you all to agree that a high-
octane fuel standard, if done right, could be an improvement 
over the status quo? And that is a pretty easy yes or no. Start 
at that end.
    Mr. Columbus. Yes.
    Ms. Skor. A high-octane standard, provided that you couple 
that with the market access and the drive toward growth that 
you get with a Renewable Fuel Standard.
    Mr. Walden. So I just want to make sure we are answering 
the same question. Can you agree that a high-octane fuel 
standard, if done correctly, could be an improvement over the 
status quo, yes or no?
    Ms. Skor. Possibly.
    Mr. Walden. OK.
    Mr. Nicholson. Absolutely, yes.
    Mr. Walden. Thank you.
    Mr. Jeschke. I will take a chance and say yes.
    Mr. Walden. OK.
    Mr. Thompson. Yes, sir.
    Mr. Walden. Thank you.
    Mr. Columbus, the gas station is where the fuel policy 
either succeeds or fails, because that is the interface with 
the consumer, and you have done a good job of representing the 
consumers here. On balance, do you see a high-octane fuel 
standard potentially working for the benefit of the consumer?
    Mr. Columbus. I do, sir.
    Mr. Walden. All right.
    Ms. Skor, one of the exciting things about the high-octane 
fuel standard--well, our version of it--is that it allows us to 
take full advantage of ethanol's properties as an octane 
enhancer. Would you agree that such a policy could lead to a 
more advantageous use of ethanol?
    Ms. Skor. I think the 95 RON policy discussed right now 
will not necessarily lead to a more advantageous use of biofuel 
for consumers.
    Mr. Walden. You know, I was on this committee--there are a 
few of us left that were in '05, '06, '07. The energy situation 
we faced then is much different than it is today. That was an 
era of scarcity. We were watching what was going on in Brazil 
with ethanol. I mean, it was a different world.
    And I supported the RFS then, and I have worked on it, and 
I have got a little bit of that. And I think there is a 
difference, by the way, between corn ethanol and the advance in 
cellulosic, and you mentioned that in your comments.
    I was in the radio business for 21 years. I would have 
loved to have had a mandate that somebody has to buy my 
inventory. I am just saying. I grew up on a farm, I get it. I 
am an orchardist. I respect corn growers.
    But as the chairman of this committee, I have this 
advantage of looking at this broadly and trying to figure out 
what is the best policy for American farmers, what is the best 
policy for consumers, and how do we move this policy forward in 
knowing that 2022 is out there?
    Now, some people I know may want to just roll the dice and 
go, ``We will see, we will just ride it, see what happens.'' I 
don't think that is the responsibility of Congress. I think our 
job is to set the policy as we did in '05-'07 to try and 
resolve a problem then. I think it is time to modernize that 
policy.
    And I just want people at the table to understand we are 
serious about this, one way or the other, and we want to get it 
right for the American consumer so it is sustainable, 
predictable, and we continue to make progress to reduce harmful 
emissions, we continue to help our farmers, but we also put the 
consumer first. The consumer first.
    And so I struggle with this. This is a hard one for all of 
us. And we know the realities of the Senate. We know the 
realities in getting votes around here. I understand all the 
market forces, political market forces, at work. I am not naive 
to that. But I think we have a big responsibility to the 
country here to do this right.
    And so, I don't know if I have got any more questions on 
it. I appreciate you all being here. I know you are all looking 
at this seriously. I just want to implore that we continue 
these discussions, because I think there is a path forward that 
will work for our growers wherever ethanol is being produced, 
grown, and that can work for the consumers and give the 
stability.
    And I want to thank the autos for coming to the table, 
because we want to make sure we are not jamming something that 
will not work for engines. And I would defer to you about that, 
that issue.
    If we do this right, you will create demand for this higher 
octane, right? It will be predictable.
    Mr. Nicholson. Yes, we are very happy about this. This is 
the most cost-effective way to increase fuel economy and reduce 
greenhouse gases. And so we are really happy to have the 
hearings and to move this forward as quickly as possible.
    Mr. Walden. And, Mr. Thompson, from your perspective, are 
there issues in other States that could be adversely affected 
if we get the number wrong?
    Mr. Thompson. Absolutely. So, again, we can talk 
conceptually about E20, E30, but if we put it in the context of 
what we are trying to do is address CAFE in the near term, 95 
RON is the only product that can be sold nationwide. California 
and five other States do not allow the sale of E15 or higher 
octane blends.
    So how could we put the autos in a position of rolling out 
a new product but not be able to get fuel to them? Ninety-five 
RON is the only product that is scalable within the timeframe 
of CAFE compliance.
    Mr. Walden. I know I have exceeded my time. Thank you, Mr. 
Chairman, for your leadership on this.
    And, again, to everybody on the panel, we know you are 
serious about it. We appreciate your working with us.
    And I yield back.
    Mr. Shimkus. The gentleman yields back his time.
    The Chair now recognizes the gentleman from Texas, Mr. 
Green, for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman, for having this 
hearing, although I would at least ask for one more refiner on 
there to match up with the corn folks here.
    I want to follow up what the Chair said, that 2005, '06, 
'07, and '08, this subcommittee had a hearing in 2008 on peak 
oil. Obviously, it has changed to 2018.
    Mr. Columbus, your members actually typically sell what we 
call regular gas and premium gas.
    Mr. Columbus. Yes, sir.
    Mr. Green. What is the percentage right now that you are 
selling of premium?
    Mr. Columbus. Under 20.
    Mr. Green. Under 20 percent?
    Mr. Columbus. Somewhere around 15. Well, yes, I am not even 
sure premium. Regular-grade gasoline is something north of 70 
percent, sir, midgrade 89 octane. Premium gasoline is probably 
10 to 12 percent.
    Mr. Green. Well, most of our vehicles on the road today are 
made for running very efficiently at regular gas. And if we do 
it, and maybe the manufacturers will do it, so if we end up 
going to 95 percent, you are going to increase the cost at the 
pump for people running their vehicles.
    Mr. Columbus. All right. Number one, perhaps initially it 
is not clear to me, sir, that on a long-term that is going to 
work. The reason E15 has entered markets where it is lawful is 
it is offered at a price which is less than regular-grade 
gasoline.
    Mr. Green. Not in my area in Houston. Very often we don't 
have a whole lot of----
    Mr. Columbus. Well, not at all.
    Mr. Shimkus. Everything is bigger in Texas.
    Mr. Green. That is right.
    But that is one of my concerns. And I am glad the 
manufacturers are here, because they make the vehicles. And our 
fleets turn over fairly regularly, so people may not notice it. 
But by doing this, you will require that people pay more at the 
pump, which is not a popular issue. And you are a marketer. You 
are not the one.
    Mr. Columbus. No. Again, sir, I believe experience shows us 
that, if there is an absolute demand for a product, the price 
of it tends to go down. This is a 7 percent shift in vehicles 
every year. As that product comes in, I don't doubt that at 
first it will be priced higher than regular-grade gasoline 
simply because it will still be a specialty product.
    As you evolve, as you transform the market, that price will 
come down. And, again, if you give me the one-pound waiver on 
higher blends and give me time to redo the infrastructure to 
tolerate them, I suggest that you will find that that price 
becomes very competitive and looks a lot like what regular 
gasoline or less than regular gasoline would cost today.
    Mr. Green. Well, my concern is right now that if we change 
the fleet over the period of years, people are going to pay 
more at the pump. And right now I am hearing people, even in 
Houston, complaining that the price is going up, because we are 
going to a summer blend in Texas, and that is more expensive to 
refine. So that is one of the concerns.
    I was on the committee in 2005, and I want to thank our 
former chairman, Joe Barton, who was here a minute ago, who was 
the chair of the committee. We did a really good energy bill. 
And a lot of my environmentalists forget that that bill also 
authorized the wind power, the solar power, and what we have 
done on our electricity generation.
    But the RFS I considered was a failure, because here we are 
13 years later. And I have one relatively small biofuel 
refinery in my district. We used to have three, but they 
couldn't go with the market over the last number of years.
    But when we talk about biofuels, what percentage is corn-
based, Ms. Skor, corn-based as compared to what some of us 
thought back in 2005, it would be cellulosic, we would be 
recycling things, instead of making the price of our corn 
whiskey go up?
    Ms. Skor. Right now the vast majority is blended with corn 
ethanol, so conventional ethanol.
    We do have advanced cellulosic ethanol on the market. And I 
would say that, if you look at the progress that has been made 
in the 10 years, one of the things that has slowed our ability 
to innovate and get more cellulosic to the market was the 
implementation of the RFS and the uncertainty in terms of what 
was taking place at EPA.
    That uncertainty sends the wrong market signal to 
innovators and investors. And so it is with stable policy that 
we will get more.
    Mr. Green. I only have a few more seconds. And I agree, 
because in my area in Texas we were reformulating our gas in 
the 1990s, early 1990s, and it was an environmental benefit. 
But we used MTBE, a product of natural gas. But the 2005 energy 
bill, the House bill, actually had a waiver there for those 
producers of MTBE, but the Senate didn't accept it.
    We are still producing MTBE in Texas for export market, but 
we can't use to it reformulate our gas. And now we have lots of 
natural gas that we could be using that for.
    Mr. Chairman, I know you and I have this battle for a 
number of years.
    Mr. Shimkus. Welcome to my world.
    Mr. Green. I would like to reform the RFS, but I am not so 
sure this is the way it needs to be reformed.
    Mr. Shimkus. The gentleman's time has expired.
    The Chair now recognizes the other gentleman from Texas, in 
a bipartisan manner, the gentleman, Congressman Barton, for 5 
minutes.
    Mr. Barton. Thank you, Mr. Chairman. And I am here under 
protest. I don't do getaway hearings, and I darned sure don't 
do hearings that start at 9 in the morning.
    Fortunately, we have a witness that represents one of the 
companies that is one of the biggest employers in my district. 
General Motors has an assembly plant in Arlington, Texas, that 
is one of the most successful plants in their company. And so I 
am honored to be at this hearing because of that.
    I listened to Chairman Walden, and I will say, the country 
is well served that he is the chairman right now. If I were 
still chairman, I would be in a wrestling match with Chairman 
Shimkus because I would be repealing the Renewable Fuel 
Standard and I would take a go at repealing the Corporate Fuel 
Economy standard.
    I was chairman in 2005, and we have the RFS, the original 
RFS, because the Speaker of the House was Denny Hastert from 
Illinois. And he said, ``We are not going to have a debate 
about this, Joe. You are chairman, but I am Speaker.'' And that 
was pretty determinative. I mean, I said, ``Yes, sir, Mr. 
Speaker.'' But it was a more lenient RFS, I think a more 
reasonable RFS.
    So there is no question that it is important to our corn 
growers, our agricultural sector. But at the same time, nobody 
can say ethanol is a struggling startup industry anymore. So 
you don't really need all the protection, the mandates, the 
quotas that we have today. So this high-octane alternative, I 
think, is a very reasonable proposal. I really do.
    So I guess my question to Mr. Nicholson would be, Is there 
any doubt that the manufacturers can manufacture engines to use 
that type of fuel?
    Mr. Nicholson. There is no doubt. We are at the table. I am 
representing U.S. CAR, and we are all prepared to do our part 
to redesign the engines at great expense and great investment 
in order to deliver this roughly 3 percent fuel economy 
improvement from the 95 RON. It is very important. And we think 
it is a consumer-facing way that consumers will get benefit 
from and we will get reduced greenhouse gases. So we are here 
and ready to support.
    Mr. Barton. And I guess--is it Skor, is that how you say 
it? You seem to be the proponent of the ethanol industry.
    Ms. Skor. Yes, I am.
    Mr. Barton. Is there any doubt in your mind that the group 
that you represent, that if we were to move to allowing a high-
octane fuel, that your industry still wouldn't thrive?
    Ms. Skor. You know, honestly, we wish that we could because 
of all of the reasons, the benefits of ethanol as high-octane 
and homegrown renewable fuel.
    The challenge, and the reason that we believe we continue 
to need the guardrails provided by something like the Renewable 
Fuel Standard is it is not an open marketplace. We don't have 
access to the consumer. And until there is a marketplace where 
we can----
    Mr. Barton. What do you mean by that? What do you mean you 
don't have access to the consumer?
    Ms. Skor. If you look at the fuel marketplace, so much of 
the access to the----
    Mr. Barton. You have guaranteed access.
    Ms. Skor. Yes, with the Renewable Fuel Standard now we do 
have the ability to compete. And what we would want to see in 
conversations moving forward is, what is the path for continued 
access to the consumer?
    Mr. Barton. Well, I am going to give back a minute, Mr. 
Chairman. I do appreciate you holding the hearing. I will yield 
to Mr. Flores, if you want my last minute.
    Mr. Flores. That is OK, Mr. Chairman, because I have got a 
ton of questions. This is a great panel.
    One of the things I am hearing is that everybody agrees we 
need to have a higher octane standard, right? OK.
    The second thing, the questions I am hearing are: How much? 
How high should that go? How do we get there?
    And then the third thing I am hearing is, How long should 
we spend to go from where we are today to go to that new 
standard, so that not only can the ethanol industry and the 
retailers and the auto manufacturers and the refiners get ready 
for that, but also get our consumers educated and ready for 
this new world of higher RON?
    I only have a few seconds left, so I will wait and use that 
as my intro for the next round. But it does sound like it is a 
win-win-win for the environment, for our consumers, for the 
ethanol markets, including advanced and cellulosic conventional 
for our marketers and retailers, and also for our refiners and 
auto manufacturers. It sounds to me like everybody wins. So I 
think we need to look at that versus status quo, which is 
clearly a loser.
    I yield back.
    Mr. Shimkus. The gentleman's time has expired.
    We are going to have votes pretty soon. I plan to come 
back, Mr. Tonko is going to come back, so that we can finish 
our questions and maybe go to a second round for those who want 
to delve back in this.
    The Chair now recognizes the gentleman from California, Mr. 
McNerney, for 5 minutes.
    Mr. McNerney. OK. Well, I appreciate the chairman jumping 
over to me. And I appreciate the panelists here this morning.
    Mr. Nicholson, I am very concerned about the Trump 
administration's proposal to roll back greenhouse gas and fuel 
economy standards for model years 2022 to 2025 automobiles and 
light trucks. My State of California is committed to reducing 
tailpipe emissions and getting vehicles on the market that use 
less fuel and emit less carbon per vehicle mile traveled.
    So given that backdrop, I would like to know where GM 
stands on EPA Administrator Scott Pruitt's recent statement in 
opposition to California's ability to set greenhouse gas 
emission standards for automobiles under the Clean Air Act.
    So does GM agree with Administrator Pruitt's opposition to 
the California waiver?
    Mr. Nicholson. Can you ask the last part of the question 
again?
    Mr. McNerney. Sure. Does GM agree with Administrator 
Pruitt's opposition to the California waiver?
    Mr. Nicholson. So that is not a question about the midterm 
review or----
    Mr. McNerney. That is right. It is a question about your 
agreement with----
    Mr. Nicholson. Yes, I am not really prepared to give 
General Motors' point of view on that question. I am in global 
propulsion systems and product development, and we are here to 
talk about octane and engines. And I am not really informed 
about the waiver or whether that is OK or not OK.
    Mr. McNerney. Well, this is an important question, 
especially to California, but to the Nation in general. If the 
automakers understand, in my opinion, that the high fuel 
efficiency standards are in their interest in the international 
auto market, then they should be in opposition to this 
potential opposition.
    Mr. Nicholson. We do have a prepared statement on the 
midterm review, and I would be happy to share that with the 
committee.
    Mr. McNerney. All right.
    Ms. Skor, Mr. Thompson has proposed replacing the Renewable 
Fuel Standard with 95 RON octane performance standards. 
However, if the octane is not sourced from ethanol, wouldn't 
this just lead to an increased oil use?
    Ms. Skor. Potentially. Ninety-five RON is a 91 octane fuel. 
That is the premium fuel on the market today. There is every 
opportunity, in many instances, for refiners to make that 
premium fuel with more ethanol, and yet, they are not doing it, 
even with the economic incentive of ethanol as the lowest 
octane. So 95 RON, at best it is status quo, and perhaps you 
will be using less ethanol than today.
    Mr. McNerney. Thank you.
    It wasn't that long ago that we were hearing about E15 
causing damage in engines. We had a Briggs & Stratton in here, 
some of the auto manufacturers were concerned about that.
    Is that still a concern about E15 damaging engines and 
causing long-term damage?
    Ms. Skor. Is that a question for me?
    Mr. McNerney. You can answer it if you want.
    Ms. Skor. Well, I will defer to the auto. But I will say, 
kind of, I will provide part of an answer. E15 is approved for 
9 out of 10 vehicles on the road today. And so, in fact, I 
applaud GM for being the first company to warranty E15 when it 
became a legal fuel.
    So it is not approved for small engines. So all of the 
retailers who sell E15 also sell E10. Some also sell an E0.
    We did a survey with consumers who own motorcycles and 
small engines last year and asked them, ``Are you satisfied 
with the fuel choices on the market? Do you believe that you 
are using the right fuel for your engine?'' And the resounding 
response across the board was yes.
    Mr. McNerney. Go ahead.
    Mr. Nicholson. I can confirm that answer. So for U.S. CAR, 
E15 is fine. We have been that way since 2012. But there are 
lots of people filling up at the pump with all kinds of small 
engines that have different answers. But for U.S. CAR, E15 is 
fine.
    Mr. McNerney. How far do you think we can go with ethanol 
in our cars, in most cars out there today?
    Mr. Nicholson. Well, E15 is where we are at today. It would 
require redesign of fuel systems. You have to actually look at 
every single part that touches the fuel in the car to go 
higher.
    So we are not prepared to really talk about anything higher 
today. It may be technically possible. But for today, E15 is 
what is OK.
    Mr. McNerney. OK. Thank you. I yield back.
    Mr. Shimkus. The gentleman's time has expired.
    The Chair now recognizes the vice chair of the 
subcommittee, Mr. McKinley, for 5 minutes.
    Mr. McKinley. Thank you, Mr. Chairman.
    I am just curious from your testimony. I was just Googling 
the Federal Trade Commission, their website, and their consumer 
division within ftc.gov says that higher octane gasoline offers 
absolutely no benefits, it won't make your car perform better, 
go faster, or get better mileage, or run cleaner.
    I am trying to reconcile that with all the testimony we 
have been hearing and all this debate. So who is right? The 
Federal Trade Commission?
    If it is not going to run cleaner, better, not going to 
improve our quality of our cars, are we doing this just to 
redesign our engines? Because I assume that is what we are 
going to have to do, because typically our engines today aren't 
designed to run on higher.
    So I am trying to reconcile what we are doing here.
    Mr. Nicholson. Yes, I can reconcile that. It is a true 
statement that, if your entire vehicle, including the engine 
and the way it is calibrated, is designed for 87 AKI pump fuel, 
regular fuel today, that putting premium in it will provide no 
additional benefit.
    What we are talking about is something very different, a 
coordinated fuels-and-engines-together-as-a-system approach in 
the future. And if we redesign the engines to take full 
advantage of the higher octane and we calibrate them 
accordingly and introduce them in the market, then we can get 
this 3 percent benefit that we are talking about.
    Mr. McKinley. And the cost of retooling, what can we expect 
that that would add to the cost of the car, let alone the cost 
of the fuel when we have to change our engines entirely, our 
whole fleet? I am just curious about this.
    Mr. Nicholson. It is very costly. In fact, if we implement 
this system, OEMs, such as General Motors and Ford, FCA and 
others, would actually be investing billions of dollars to 
redesign engines, remanufacture them at higher compression 
ratios to accommodate this fuel.
    The fact that we are willing to do that and that we believe 
this is cost effective relative to other greenhouse gas and 
CAFE improvements shows you how serious we are.
    Mr. McKinley. If I could please, but you are going to pass 
that cost on, right? I mean, that is what happens.
    Mr. Nicholson. Well, we don't believe--I mean, we are 
facing regulations for greenhouse gas and CAFE.
    Mr. McKinley. I understand that, but the billions of 
dollars is going to be passed on to the consumer, right?
    Mr. Nicholson. But this is the most cost-effective thing 
that we can do. Other things we will have to do will cost even 
more.
    Mr. McKinley. We will have to have more of a conversation 
about this.
    Let me--the last question, because I want to digest that 
answer.
    The other question has to do with, before I came to 
Congress, apparently there was a move to go with flex fuels. 
And we experimented. Congress must have passed that. What have 
we learned? What have we learned from the flex fuel experiment 
in trying to improve the RFS?
    Mr. Nicholson. Fuels and engines are a system, and that is 
the most important message. It takes all the stakeholders 
working together to ensure success. And to me, that is really 
the lessons learned. We all need to go together, and we need a 
framework and a policy that really support that to makes things 
happen.
    Mr. McKinley. Has it failed? The flex fuel system 
experiment, did it fail?
    Mr. Nicholson. I think everybody can judge that for 
themselves.
    Mr. McKinley. How would you judge it?
    Mr. Nicholson. I wasn't here at the time when it was 
passed.
    Mr. McKinley. No, right now, today. Has it worked? Was it a 
good investment?
    Mr. Nicholson. I don't really have an opinion on that.
    Mr. McKinley. Anyone else want to comment on the flex fuel 
experiment?
    Mr. Columbus. It didn't work.
    Mr. McKinley. It did not?
    Mr. Columbus. It did not work.
    Mr. McKinley. Thank you.
    Mr. Columbus. Well, no. Some of my members created the most 
expensive parking lot and parking spaces of any convenience 
store in history.
    First, most people didn't know that they had a flex fuel 
vehicle, as surprising as that might be. Number two, taking E85 
to market proved to be a disaster. People didn't understand it. 
They worried that they weren't getting the same value, even if 
you had to price it substantially below regular gasoline. And 
you had to charge 50 to 70 cents per gallon less to have people 
buy it. So, no, it didn't work.
    I contrast that to what we have talked about today.
    Mr. McKinley. Anyone else want to comment about that?
    Ms. Skor. I would offer, one of the important learnings 
from that experience that we have acted on--there is actually 
Government, public-private partnership on building out the 
infrastructure--is that one of the things that you needed to 
make sure is that consumers had access to the fuel so that they 
could optimize the flex fuel engines.
    So one of the things that the biofuels industry has made a 
concerted effort to do since then is work with the retailers to 
build out the infrastructure for higher blends so that, when we 
have higher blends come available, consumers can access them in 
the marketplace.
    Mr. McKinley. Mr. Chairman, I yield back my time.
    Mr. Shimkus. The gentleman's time has expired.
    The Chair now recognizes the gentleman from Ohio, Mr. 
Johnson, for 5 minutes.
    Mr. Johnson. Thank you, Mr. Chairman. I appreciate it.
    Important topic, especially in a large agricultural region 
and energy region that I represent in eastern and southeastern 
Ohio.
    Mr. Columbus, do you envision any problems for stations 
continuing to carry today's fuels for existing vehicles while 
also introducing a new high-octane fuel? I mean, would the 
transition be a smooth one?
    Mr. Columbus. I do not, sir. Today we have--almost every 
retail outlet in the United States sells a premium grade of 
gasoline, at least has one offer for that. That is a 95 RON 
product.
    As we go forward and we want to introduce and make the 
price of those gasolines go down, we will need to add, I 
believe, more ethanol, and that will drive the price of that 
product down from where it is today. Today it is a specialty 
product, and it is priced highly.
    Mr. Johnson. OK. Do you envision gas stations in some parts 
of the country meeting a high-octane standard with more 
ethanol, and perhaps stations in other parts of the country 
with relatively less?
    Mr. Columbus. Yes, sir. I think what you are going to see--
first of all, I want to remind everybody, demand pulls supply. 
``If you build it, they will come'' only worked for Kevin 
Costner, and that was a movie. So we are going to sell what the 
people want.
    In some parts of the country, they want lower ethanol 
mixes. I don't know why. I mean, if you go to Mr. Cramer's part 
of the world today, you can go get E0 for 60 cents a gallon 
more than you can buy regular grade 10 percent ethanol. I don't 
know why people want to do that.
    But if the demand is there for lower amounts of ethanol, it 
will get served that way. But on a cost basis, I think you will 
find that higher ethanol blends will be very attractive.
    Mr. Johnson. OK. Well, thank you.
    Mr. Thompson, what kinds of facility changes would 
refineries need to undertake to start producing high-octane 
fuels or blend stocks for high-octane fuels? How much would 
they cost?
    Mr. Thompson. Well, it depends upon whether the program is 
phased in. So, in our world, in order to do this properly, the 
RFS would continue and then phase out, sunset. But on the early 
years of the transition, it would cost our facilities very 
little because we can now produce 95 RON at the moment, and we 
believe we could make enough to coincide with the introduction 
of the new vehicles.
    Over time, it would probably cost multiple tens of billions 
of dollars of investment to generate new sources of octane, the 
ability for us to generate that, and also the new BOBs that 
would have to go along for higher levels of octane.
    So this would not be cheap for us. And to a point that was 
made earlier, we are here not in a void, or a vacuum, we are 
here offering up a compromise solution to bad status quo, which 
is how do we help the autos comply with CAFE and how do we make 
the RFS better? We are willing to make that investment, because 
at the end of the day, it is cheaper for consumers.
    Mr. Johnson. Gotcha. OK.
    Mr. Jeschke, how much fuel ethanol use do you expect this 
year and the years ahead under the current RFS? And how much 
more could a high-octane standard provide?
    Mr. Jeschke. We are going to use somewhere 14-plus billion 
gallons this year, but we would hope to grow that because of 
increased blending, as Ms. Skor has pointed out many times 
here. But it all depends on what this group, what this body 
comes up with for the rules and regs following. I guess I am 
skeptical, as Ms. Skor is also, that the petroleum refiners 
will use more ethanol voluntarily.
    Now, as a farmer, as a proponent of ethanol, as a person 
that has used it in my vehicle since the 1970s--and by the way, 
I have a Briggs & Stratton engine that we bought in 1975 on a 
rototiller that has had E10 in it ever since we bought it, and 
I guarantee it will start on the second pull every spring. So 
these small engines can run on ethanol, the old ones, even, 
that weren't approved for it.
    But we need to grow that market for us to be able to expand 
our corn operation. I am getting the same price when I started 
farming. Corn was in the mid-$3. Gasoline was 40 cents then in 
the mid-1970s. Today, gasoline is $2.50 a gallon, and I am 
still getting in the mid-$3 for my corn.
    So dynamics, I am very, very vested in ethanol and trying 
to promote expanded use. So that is why I very, very much want 
to see increased blending, not the status quo.
    Mr. Johnson. OK.
    Very quickly, Mr. Thompson, you wanted to make a point?
    Mr. Thompson. Yes, I would like to just add, because it has 
been referenced a few times that we are not using all the 
ethanol. We are using every drop we can use. There is a blend 
wall here. We are using as much ethanol as our existing auto 
fleet can handle. There is no place else for it to go.
    And with all due respect to Ms. Skor, she is a wonderful 
advocate for her client, it is not accurate that 9 out of 10 
cars can handle E15.
    The gentleman from California, we can't even sell E15 in 
his State, OK, by law. Most cars today are not warranted to run 
on anything higher than E10. It is a fact.
    Mr. Johnson. Mr. Chairman, I yield back.
    Mr. Shimkus. The gentleman yields back his time.
    We are going to go to Bill Flores for 5 minutes, then we 
will recess, because I think votes were just called.
    And I want to thank Congressman Flores. He has been an ally 
and a friend working on this together, so I want to give him a 
lot credit for that.
    Mr. Flores. Thank you. We come at this from different 
angles, but I think we are coming to a fairly common conclusion 
here.
    For the folks that are not in this hearing room, I think it 
is probably good that we sort of tell everybody how the numbers 
we are talking about today fit the numbers they say on the 
pump.
    So today, if you see an 87 octane on the pump, that is an 
AKI octane, which is equivalent to 91 RON, right? So the 91 
octane you see on the pump today, is actually a 95 RON. So just 
for everybody outside the room, I think it helps to reset that 
we are not talking about reinventing the entire auto refinery 
ethanol complex here.
    Ms. Skor, is there a value to raising the RVP waiver? And 
what is that value? As quickly as you can.
    Ms. Skor. So eliminating the RVP?
    Mr. Flores. Yes, ma'am. That is what I meant.
    Ms. Skor. Eliminating RVP, absolutely, you would allow a 
legal fuel to be sold year-round, when most of the country it 
is not able to be sold in the summer months when most families 
are taking their summer vacation travel.
    Mr. Flores. Mr. Columbus, do you agree with that?
    Mr. Columbus. I do, sir.
    Mr. Flores. OK. Mr. Columbus, what are the challenges--
well, we have got six States that don't allow anything above 
E10, which is about 19 percent of our gasoline demand in this 
country today: California, Delaware, Montana, New York, Oregon, 
and Wisconsin. So this question doesn't apply to those States. 
For some reason, they don't like higher blends of ethanol.
    But, Mr. Columbus, what are the challenges of having an 
ethanol blend above E15?
    Mr. Columbus. It is the same challenge that E15 faces in 
terms of market introduction. The overall impediment, the 
biggest impediment, Mr. Flores, is in fact the infrastructure 
and how we regulate underground storage systems.
    Mr. Flores. OK.
    Mr. Columbus. The Office of Underground Storage Tanks 
says----
    Mr. Flores. So if we go above E15, then we have got a whole 
new cost element for the consumer, right?
    Mr. Columbus. Retailers that are going to E15 now are doing 
that first and foremost in new facilities and rehabbed 
facilities. For the most part, the existing infrastructure is 
not warranted or certified to take----
    Mr. Flores. OK. I have got a limited amount of time. But if 
we are asking--I mean, we have had some panelists ask for 
midblends, E20, E30, higher blends like that. There is a huge 
consumer cost to that, if we do that, though. Is that correct?
    Mr. Columbus. I believe if we do it the way we have talked 
about, no, because this will----
    Mr. Flores. No, no, I am talking about if we mandated--
let's say we mandated a higher RON, 95 or above, and then we 
also mandated that it has got to be an E20 or an E30, then that 
is where you get into the higher consumer costs.
    Mr. Columbus. Right. If you do a performance specification 
as opposed to a formulaic specification, the consumer will be 
best served.
    Mr. Flores. Right. OK.
    Mr. Nicholson, if we go to, let's assume, a 95 RON, that 
gives us the ability to do a nationwide standard from 
California to Maine, which also matches the RON of Europe.
    What are the benefits of that, as quickly as you can share?
    Mr. Nicholson. For 95 RON, 3 percent improvement in fuel 
efficiency and reduction in greenhouse gases.
    Mr. Flores. Right. And so you can optimize your engine so 
that, whether you are selling from either coast, even if you 
are selling your cars in Europe, it is all one standard, which 
means better economies of scale for production, and you have a 
lower impact to the consumer per unit, right?
    Mr. Nicholson. As I pointed out in my testimony, Europe has 
had 95 RON for several years, and consumers are getting those 
benefits. And I think Americans should get the same benefits.
    Mr. Flores. OK.
    Mr. Thompson, we talked about several States have standards 
that prohibit us from going above E10. So, if Congress decides 
to mandate a formulaic standard in addition to a RON standard, 
then we are going to have challenges in meeting the standards 
of some States.
    You know, one of the things that has been proposed, one of 
the comments that was sort of thrown out earlier is that 
refiners have been anti-ethanol, in so many words. If we raise 
the octane standard, why would refiners want to use anything 
other than the cheapest form of octane enhancement, which today 
is ethanol? Why would that happen?
    Mr. Thompson. They wouldn't. And I would like to point out 
that, within my membership, we have some of the largest ethanol 
producers in the country.
    Mr. Flores. Right.
    Mr. Thompson. And I will just mention that when we look 
back--and I say this as someone who worked 3 years at EPA and 
very familiar with these programs--if you look back where we 
have gotten in trouble as a country, it is always when there 
has been a mandate or a formulaic approach.
    Mr. Flores. Right.
    Mr. Thompson. It just is, versus allowing and creating a 
performance-based approach to let the market decide the best 
way forward.
    Mr. Flores. So, again, to repeat where I started this 
conversation when Mr. Barton yielded me some time, by going to 
a performance standard, everybody wins: the environment, our 
consumers, our auto manufacturers, our ethanol constituents, 
including the advanced and conventional folks, our marketers, 
retailers, refiners. Everybody wins. So I am not sure why we 
would want to do anything other than a performance-based 
standard.
    And I do accept the recommendations of Ms. Skor that we do 
need to address the RVP waiver. So in terms of the legislative 
solutions, that is something we will definitely keep in mind.
    Thank you, Mr. Chairman. I yield back.
    Mr. Shimkus. The gentleman yields back his time.
    We are going to recess this hearing. We will return after 
votes. And I know there will be a couple of us who will return 
for that. So the hearing is recessed.
    [Recess.]
    Mr. Shimkus. Thank you all for coming back. We only had one 
vote, so we will get started.
    I would like to now recognize the gentleman from Michigan, 
5 minutes.
    Mr. Walberg. Thank you, Mr. Chairman.
    What is the RFS standard for AV fuel?
    Mr. Shimkus. Say that again?
    Mr. Walberg. What is the RFS standard for plane fuel? I am 
going to get on a plane here shortly.
    Mr. Shimkus. High octane, baby.
    Mr. Walberg. High octane.
    Well, I appreciate this, Mr. Chairman, I appreciate the 
hearing. And we all wish it might not have been on a fly-out 
day.
    I, for one, I am a motor guy. Living in Michigan, you have 
got to be a motor guy. Having an almost classic Camaro, I am 
glad to see GM here. But having antique and classic motorcycles 
as well, including my Harley, this is an issue of much 
importance to me.
    I have rebuilt engines plenty of times, but it has been 
primarily because of what I have done to them as opposed to an 
outside source that can have an impact. And I can't build my 
classic car engines and motorcycle engines again very easily, 
changing them from the ground up in order to deal with RFS 
standards, et cetera.
    So this is important. And I don't want them to be expensive 
doorstops that I can just look at. The Camaro is downstairs in 
the parking lot in this building, and I enjoy driving it. And 
so this is important.
    Let me ask you, Mr. Columbus, what can be done to ensure 
consumers are not misfueling their motorcycles, their boats? I 
have just recently had to buy a new outboard engine because of 
the destruction on my good old engine that served me very well. 
I buy premium zero for my outboard motors. I don't buy that for 
all the rest. I can't afford it for all the rest of my 
vehicles.
    But how do we deal with that misfueling?
    Mr. Columbus. The misfueling is going to take a combination 
of dispenser equipment and I think auto equipment. We are 
working with the cars and with the refiners to try to figure 
out what would be a practical and low-cost regime to protect 
people from themselves, if you will.
    Mr. Walberg. Well, not only. I mean, if you have a pump 
with a single hose at it and you have whatever was used last 
left in it, and I come up with my Harley, and I am going to put 
2, 3 gallons in, a good percentage of that may be E15 or 
whatever.
    Mr. Columbus. Unless it is marked E15, it won't be E15. It 
may very well be E10. And what I would suggest to you is you 
either go to a place that sells E0--and that is easy for me to 
say to you--or you take a gallon can with you and fill it about 
half full with that E10.
    Mr. Walberg. Yes, I carry that on my motorcycle, right. 
When I take a thousand-mile trip, I am going to carry a gallon 
thing with me. I am saying, these are things we have to 
consider.
    And I do wish, Mr. Chairman, we would have had 
representatives from the marine industry, the motorcycle 
industry here as well to talk about this, because they are not 
satisfied that it is going to be for the industry, that it is 
going to work.
    Mr. Columbus. But one of the other things you might 
consider doing is talking to EPA about making its product 
transfer documents regime a little simpler for people, because 
there is in fact an ethanol-derived fuel, isobutylene, that is 
a drop-in fuel, it is completely compatible. But trying to get 
it to the market based on the fact that EPA says you have to 
have product transfer documents that say you can blend it with 
that blend stock is really tough.
    Mr. Walberg. Yes, well, let's be careful about this.
    Let me go to Mr. Nicholson. Thank you for being here.
    What is the investment required for automakers to make the 
change to vehicles designed for high-octane fuels, and how much 
time will you need to do it?
    Mr. Nicholson. Thank you for that question.
    As I said earlier, switching over all the engines to high 
compression ratios is literally going to be billions of 
dollars, investments spread across all the U.S. CAR and other 
auto manufacturers.
    Lead time-wise, we really need 4 years minimum, and that is 
actually going fast when you think about making all those 
changes. So, if we were to get legislation this year, we think 
we could be ready for 2022 calendar year or 2023 model year. 
That is why we have got a sense of urgency of really trying to 
go fast as we can here to get this legislation.
    Mr. Walberg. What do you expect the increase in fuel 
mileage will be? And what is going to be the cost to consumer?
    Mr. Nicholson. The increase in fuel economy from the 95 RON 
proposal we think is 3 percent. Some consumers may not notice 
that as much, but it is really substantial when you think about 
the CAFE impact. And we think there is about a 3-to-1 ratio, so 
you get three times more benefit than what the cost would be at 
the pump. We think this is an excellent value for consumers.
    Mr. Walberg. This is the lowest-priced way that you think 
you can meet CAFE?
    Mr. Nicholson. Exactly. For now, this is the most efficient 
way. Of all the things that we are doing and considering, this 
is the most cost-effective one that we have.
    Mr. Shimkus. The gentleman's time has expired. I would 
remind the gentleman that we did have small engines here at our 
last fuels hearing.
    So with that, I would like to turn to the gentleman from 
California, Mr. Ruiz.
    Mr. Ruiz. Thank you, Mr. Chairman. I know how it is when 
you sit on the committee and wait for the very last person, so 
I am going to yield my time to Mr. Loebsack from Iowa.
    Mr. Shimkus. You are very kind.
    The gentleman from Iowa is recognized.
    Mr. Loebsack. Thank you, Mr. Ruiz.
    And thank you, Mr. Chairman, for holding this hearing, and 
thank you for letting me be waived onto this subcommittee as 
well. I am going to have to think of something to help Mr. Ruiz 
with, because that was very kind of him.
    Listen, I think we all know that the future of America's 
transportation fuels is an important topic going forward, and I 
have really enjoyed the debate today, such as it has been.
    We have had some positive moments, including yesterday when 
the President publicly supported allowing year-round sales of 
E15. We want to make sure that he follows through with that 
going forward. That is an issue that I have championed with 
Congressman Smith from Nebraska. We have had legislation that 
we introduced on that front.
    But there have been some seriously concerning moments when 
it comes to these kinds of issues. We have seen recently some 
reports about the waivers that the EPA has granted to small 
refiners, so-called small refiners, to release them from their 
obligations under the RFS program.
    And one of the problems is that these waivers have occurred 
sort of under the cover of darkness, too. It hasn't been an 
entirely transparent process. And I brought that up with Energy 
Secretary Perry yesterday, as a matter of fact, in this very 
same room. And essentially, they have amounted to giveaways by 
the EPA, I would argue, to some of the Nation's largest, most 
profitable refiners.
    As you all can imagine, the biofuels community and farmers 
in Iowa have expressed significant concerns about these reports 
to me directly, as a matter of fact. And these concerns have 
been echoed by many, including the Secretary of Agriculture 
himself, Sonny Perdue, who stated earlier this week that these 
waivers reduced the statutory volume gallon for gallon, 
essentially.
    So it has become quite clear to me that this action does 
constitute a demand reduction--destruction, in effect, and a 
reduction, if you will. And I can only imagine how harmful this 
will be to Iowa farmers, to Illinois farmers. Also, to the 
folks who support the industry, all the workers in the biofuels 
industry that we often don't think enough about, I would argue.
    So, Ms. Skor, I am really happy to see all of you here 
today, but I want to ask you, in particular, a couple 
questions, if that is all right.
    Do you believe that the EPA is misusing these hardship 
waivers?
    Ms. Skor. Absolutely. We would agree with our Secretary of 
Agriculture, as he said that.
    There are a few very troubling things about what is taking 
place right now. One is that this is under the cover of night, 
so we don't know how many refiners are getting waivers and we 
don't know the justification.
    From the reports that we have seen, just for 2017, Mr. 
Pruitt has quadrupled the relatively historical number of 
waivers granted. And the impact of the behavior that we are 
seeing coming out of EPA is you are taking over a billion 
gallons of demand out of the marketplace. Every waiver granted 
is a gallon of biofuel that is not blended.
    Mr. Loebsack. Right. And as I said, we did have Secretary 
Perry right here yesterday, and I did ask him about that. 
Because by law the EPA is supposed to consult with the DOE 
before they do this. And he said that did happen, but he wasn't 
particularly specific about that consultation.
    So I have submitted a number of questions to him in terms 
of how often this has happened since 2013 so he can get back to 
us. And we want to know specifically when it has happened.
    So you mentioned about a billion gallons, you think, of 
biofuels?
    Ms. Skor. Over a billion gallons. And that is moving us 
backwards to 2013 blending levels. So with these steps, we have 
moved back 5 years and turned back the clock on the progress of 
the RFS.
    Mr. Loebsack. And that is very disconcerting, obviously.
    Mr. Jeschke, it appears to me that the biofuels industry 
and agricultural groups have not yet identified what the right 
path forward on octane is. Would you agree with that, that we 
haven't gotten an agreement?
    Ms. Skor. Yes, I would.
    Mr. Loebsack. How about you, Mr. Jeschke?
    Mr. Jeschke. Yes.
    Mr. Loebsack. And just make sure that everybody here keeps 
us up to date on what is going on. I know the committee is 
going to be kept up to date. But we want to make sure that we 
are in touch with all the stakeholders, really. I have only 
asked questions of two folks. But I am concerned that this be 
something that all the stakeholders do take into account and 
have some input on going forward.
    I would agree with the Chair of our committee that, while I 
was not here in 2005, clearly things have changed here in 
America. But we still have a lot of the same concerns around 
the RFS and why we have the RFS in the first place. And part of 
it is I don't want to be sending relatives that I have over to 
the Middle East to fight in a conflict where oil is at stake.
    We do have a national security issue here. But, as one 
person from Illinois just a minute ago told me confidentially 
in a conversation, this is about food and agricultural security 
as well. We have to keep that in mind going forward.
    So thanks, everybody. I appreciate it.
    And thank you again, Mr. Ruiz, for allowing me to go ahead.
    Mr. Shimkus. The gentleman yields back his time.
    The Chair now recognizes the gentleman from Texas--we have 
a few of those on this committee--Mr. Olson, for 5 minutes.
    Mr. Olson. Thank you, Mr. Chairman.
    And before I talk about the RFS, I want you all to note a 
very important thing to happen about 2 hours ago in this 
committee. Our chairman proved he is a want-to-be Texan. He 
keeps saying ``y'all'' and ``in Texas, bigger is better.'' 
Recognition, he is my mentor. He gave me a Shimmy, a bobblehead 
John Shimkus. I am going to put a cowboy hat.
    Welcome to Texas, Mr. Chairman.
    I want to be serious about, as you all know, I have some 
deep concerns about going forward with the RFS as it stands 
today. It was designed for a very different American energy 
environment. We were an importer of oil and gas. Now we are an 
exporter. I think today it stands as a very flawed mandate.
    One problem I have with the RFS is the severe costs it has 
placed on smaller independent refiners, like CVR, which is 
headquartered in my district, Sugarland, Texas. For those 
reasons, I worry about the potential cost of an upgrade to 
newer, higher octane fuels.
    First question to you, Mr. Thompson: Could you please talk 
about what sorts of projects you have or changes we have to 
make to move to a higher octane fuel, and what that might cost? 
Would that be doable for small refiners like my guys in 
Sugarland, Texas?
    Mr. Thompson. Well, a couple things. We are very proud of 
CVR as well, CHS, and all of our small merchant refiners, and 
they are supportive of me being here today and talking about 
higher octane, for sure.
    So initially moving to a higher octane standard, provided 
it is on a proper glidepath, there would be little investment 
required because we have the capability now to deliver the 
volumes that a new fleet of automobiles would require.
    Over time, it would require investment. A preliminary 
analysis would be literally tens of billions of dollars to 
develop new ways and new capacity for octane sources.
    I can't get into the specifics because every refinery is 
different, as you know, and there are lots of different ways to 
increase octane, so each refinery would have to look at its 
operations.
    But this would be a major investment. And the only reason 
we are willing to do it is because we would prefer to make this 
investment than the investments that we are required every year 
to comply with the RFS, which is doing very little to help 
consumers.
    Mr. Olson. One final question. This came up with Secretary 
Perry yesterday, sitting just where Mr. Nicholson sat.
    He spent a lot of time in Iowa in 2016 running for the 
White House. That seems to be an important place to have spent 
a lot of time here. He had a lot of dealings with ethanol, 
obviously, in a corn State.
    He said his perception was the people who produce corn in 
America care a little bit about where the ethanol goes, what 
gas tanks, but they don't care too much American or overseas. 
They just want a supply source so they can put their ethanol in 
a gas tank.
    He brought up the idea of exporting our ethanol to Mexico. 
Any thoughts about, Mr. Jeschke? I mean, the idea just popped 
in my head yesterday, but that might be a viable alternative to 
what we have right now.
    Mr. Jeschke. Well, the U.S. Grains Council, of which I am a 
part--I sit on one of their committees--is looking at Mexico 
and is very involved with corn grower checkoff money in trying 
to educate and help the Mexicans figure out how they might 
replace MTBE--which I know is a favorite of some of you, and 
that is used in Mexico now extensively--but looking to possibly 
replace that with ethanol.
    So we are looking at all export markets as an opportunity 
to try and grow our demand. So that is currently going on. It 
isn't something that would be brand new.
    Mr. Olson. Ms. Skor, your thoughts on exporting ethanol to 
Mexico?
    Ms. Skor. We are thrilled that Mexico has opened its 
markets and is looking at ethanol and E10. And so we have been 
in regular conversations with stakeholders in government and 
industry there.
    I would say that exporting homegrown renewable fuel to 
Mexico is wonderful, in addition to making sure that we are 
taking advantage of this homegrown renewable fuel in our 
backyard.
    Mr. Olson. Thank you. My time is over. It is time to mosey 
on down the road, like we say in Texas. I yield back.
    Mr. Shimkus. I did think the gentleman did say a small 
refinery in Texas. Didn't you call it a small refinery?
    Mr. Olson. It is in Kansas, actually. The headquarters is 
in Sugarland, but the refinery is up in Kansas, a rather small 
one.
    Mr. Shimkus. The headquarters of a small refinery is in 
Texas.
    Mr. Olson. Yes.
    Mr. Shimkus. OK. I just want to clarify just for the 
record.
    Mr. Olson. Come to Texas. You will learn about more about 
it.
    Mr. Shimkus. Now, I would like to recognize the gentleman 
from Georgia for 5 minutes, Mr. Carter.
    Mr. Carter. Thank you, Mr. Chairman. I don't know how to 
follow that exchange, but nevertheless I will do my best.
    Thank you all for being here. Let me tell you, I represent 
the entire coast of Georgia. I have over 100 miles of 
coastline. My concern in this hearing today is mainly about 
marine engines, because we are having a lot of problems with 
the new blends having degradation on our engines, and it is 
something I am very concerned about.
    It is my understanding that the butanol has properties that 
more closely resemble that of gasoline, or align with gasoline, 
than ethanol does and that it has less of an impact, less of a 
negative impact on the engines.
    In fact, the National Marine Manufacturers Association and 
the American Boat and Yacht Council underwent a 5-year study 
with the Department of Energy studying this, and from what they 
have come up with--comparing it to ethanol--and that study said 
that biobutanol and similar biofuels have a higher energy 
content and similar emission properties and reduction 
properties while lowering the degrading properties on the 
engines.
    Have you heard of this? Has anyone heard of this?
    Mr. Columbus. Yes, sir.
    Mr. Carter. Mr. Columbus. Yes, that is fine.
    Mr. Columbus. I have. The producers of isobutanol are eager 
to try to work something out with EPA so that they can, in 
fact, put their additive with blend stock set for E10. They 
have got to go through a whole process. Anything you can do to 
help EPA----
    Mr. Carter. So you are telling me the problem is something 
that we need to be addressing here in Congress--or in EPA?
    Mr. Columbus. There is a regulatory impediment to their 
taking a product to market in an efficient way. And yes, it is 
EPA, and my bet is that the folks at EPA would be thrilled to 
hear from you about this.
    Mr. Carter. OK. Well, thank you for that information. I 
didn't realize that. And that is very important.
    Can it work? I mean, do you think that this would be 
better?
    Mr. Columbus. Look, it is a different thing than fuel 
ethanol.
    Can it work? Sure. It is a relatively small production item 
today.
    Mr. Carter. All right. Can I stop you right there and ask 
you: It is a relatively small production item today, how are we 
going to get to it market, then? Because it is not going to do 
any good if we can't get the product to the people.
    Mr. Columbus. You will get it to market the same way 
ethanol historically has gotten to market. It will go by train 
or barge and it will go----
    Mr. Carter. But I am talking about demand, if there is not 
enough demand for it.
    Mr. Columbus. Well, I think what you have just said is, if 
it is marketed properly in the marine community, there will be 
plenty of demand for it. How it will get to that market will be 
the same way that ethanol moves or that any other component 
moves.
    Mr. Carter. Right. I understand the transportation. But I 
am just looking at it in terms of the economics. I mean, if 
there is not enough of a market there, a demand for it, then I 
am afraid it is not going to get to people.
    Mr. Columbus. Well, the manufacturers of it assure me that 
they think there is plenty enough demand to support their 
efforts.
    Mr. Carter. OK.
    Mr. Columbus. They are just trying to get rid of the 
regulatory impediment.
    Mr. Carter. OK. Well, fair enough. And we certainly will 
try to see about it.
    Let me ask you, while I have got you, Mr. Columbus, about 
how it is marketed. And let me ask you something. You know what 
E88 and E15 mean to my wife? Absolutely nothing. And yet we 
have this problem with marketing.
    And that is a big concern of mine, because we have got a 
number of consumers who are using these fuels inappropriately 
and putting them in marine engines, and it is causing them 
significant problems.
    Mr. Columbus. Mr. Carter, with due respect to those people 
that you know who do that, I cannot help them if they will not 
read letters that are this big on the pump that say don't do 
that.
    Mr. Carter. I get it, and I understand that. But at the 
same time, can we do a better job of the marketing process of 
it?
    Mr. Columbus. Well, I think all of us have done what we can 
when we ruled out these ultra-low sulfur fuels. When we roll 
out a new fuel, EPA undertakes an effort with the refining 
community, with the marketing community to educate consumers.
    I cannot help people who will not read these things. And I 
know that sounds hard. But what you are finding out is the 
number one thing that people buy gasoline on isn't what it says 
on the pump, it is the big, stupid price sign. It is, what does 
it cost?
    Mr. Carter. Absolutely. I would agree with you.
    Mr. Columbus. And if they are prepared to put their second-
most expensive investment at risk for 3 cents a gallon or 4 
cents a gallon, it is a choice.
    In the 1970s, I watched people carve out fill pipe 
restrictors to put leaded gasoline into a car meant to take 
unleaded and then were angry and sued retailers because they 
said, ``That leaded gasoline that you let me buy at your outlet 
poisoned my catalytic converter, and when I went to register my 
car, it cost me a thousand dollars.'' I can't help those 
people.
    Mr. Carter. Mr. Columbus, I am with you. I understand your 
point. I think it is a valid point. But with all due respect, I 
think that we and the industry can do a better job in helping 
by simply using better marketing and----
    Mr. Shimkus. The gentleman's time is----
    Mr. Carter. Excuse me, I am sorry. I didn't realize that.
    So I hope you understand my point.
    Mr. Columbus. I empathize with your problem, Mr. Carter.
    Mr. Carter. Thank you.
    Thank you. And I yield back.
    Mr. Shimkus. The gentleman yields back. I want to thank my 
colleague.
    We have got an agreement by my friends on the minority side 
to be able to go to one more round, if that is OK with you all. 
Obviously, there are only a few of us left, so I don't think it 
will take very long. So I will recognize myself for 5 minutes, 
too, for a second round of questioning.
    Thank you all. Understand, this where we need your help. 
There are a lot of things that we need to hash out. So 
understanding that a 95 RON fuel can be produced in different 
ways by different refineries, can you estimate how many 
billions of gallons--not now, help us, provide this 
information--estimate how many billions of gallons of ethanol 
would be used to produce a RON fuel at EO, E10, E15, et cetera? 
We had conversations about this over the last couple days.
    We need to know that. And I would even suggest you could do 
it collectively, peer-reviewed. We need those numbers.
    The other thing that popped in my mind is, if the vehicle 
fleet transforms or starts moving 7 percent every year, so a 
whole passenger vehicle--except for my very old car that I 
drive, there will be a few outsiders there--13 years, right? So 
I don't know if it is possible. What happens in this 13-year 
transition to a high-octane standard, and where are the 
billions of gallons of what we would hope would be homegrown 
ethanol produced in America, right?
    We really just need numbers. Again, you could do it 
collectively, peer-reviewed. If you want to do it separately, 
then we will fight about whose numbers. Formulas are formulas. 
We will need defined variables. But we just need that help, and 
I would ask that you would do that.
    Another question is, Whatever the high-octane standard is 
set at, would you imagine a market for even higher octane fuels 
above that level? And we can just go through, and then I have a 
follow-up to that.
    Mr. Columbus. Yes, sir, absolutely. If you take a look the 
way fuels have developed over the last 78 years, you will see 
that there is always a creep.
    With respect to Mr. Nicholson, somebody at GM is going to 
look at you and say, ``That Corvette of yours, if you want it 
to purr like a kitten, you would run it on 98 RON or 100 RON.'' 
It is just how things happen.
    So, yes, we anticipate that 95 RON will ultimately become a 
floor.
    Mr. Shimkus. Ms. Skor.
    Ms. Skor. I would hope, yes, that there would be a 
continued appetite for even greater octane in the country.
    Mr. Shimkus. Mr. Nicholson.
    Mr. Nicholson. Yes. First of all, Mr. Shimkus, I would like 
to offer that U.S. CAR could be the broker to kind of do this 
analysis that you talked about. So we would certainly be 
willing to work with everyone on this panel to just do that 
analysis peer-reviewed so that we could get back to this 
committee with those numbers.
    Mr. Shimkus. Thank you for that offer.
    Mr. Nicholson. So I will just say that to anybody on the 
panel that would like to be part of that.
    To your question, for sure there will be premium fuels on 
top as there are today. As mentioned, Corvettes will always 
want to use the best possible, as well as luxury cars. So I see 
that market developing.
    In fact, I would even go further to say there could be even 
more demand in the future, given the very difficult CAFE 
regulations that are in front of us. You know, OEMs actually 
have an incentive to specify premium required, because we then 
get to take advantage of that octane with the regulators in 
certifying that.
    What prevents us from doing that today is the cost-
prohibitive 50 cents per gallon that you see at the pumps, and 
most customers, except for performance vehicles, just won't put 
up with that.
    Mr. Shimkus. Great.
    Mr. Jeschke.
    Mr. Jeschke. Yes. I would hope that we would look to those 
higher blends, higher octane with higher blends, because I 
think concern for the environment will not get less. I think it 
will continue to become greater and greater. So I believe the 
higher octane fuels, as Mr. Nicholson said, will help them to 
achieve those goals.
    Mr. Shimkus. Mr. Thompson.
    Mr. Thompson. Well, we are certainly prepared to offer up 
95 RON as a floor, not a ceiling, and let the market decide 
where it should go.
    And I will just note that E15 and E85 have been around a 
long time, and consumer preference has decided where those 
products go. We do not control access to market.
    So the consumers are going to decide whether they go 
higher. We would be open to it, provided that the floor is 95.
    Mr. Shimkus. Great. Let me finish with this last one: What 
regulatory actions would be needed to make that extra-high-
octane fuel available?
    Mr. Columbus. You have to have a modification of the one-
pound RVP waiver. And I think you have to let the 
infrastructure evolve or you have to change the regulations--
again, the Office of Underground Storage Tanks at EPA--the 
latter of which I do not believe any of you are going to be 
prepared to do.
    So the reason we are as supportive of this roll-in as we 
are is we believe the infrastructure will build out, and it 
will build out earlier because they will see down the road 
there is a guaranteed return.
    Mr. Shimkus. So my time has expired. I will look at my 
colleagues. Can I finish this question? Is that all right?
    So, Ms. Skor.
    Ms. Skor. So I just want to kind of clarify, what is most 
important and critical from the consumer perspective, 
especially when you are looking at fuel diversity and choice at 
the pump, is access. When consumers have access to E15, which 
is unleaded 88, and a 5-to-10-cent gallon savings, what we are 
seeing is they embrace it. They wholeheartedly embrace it. And 
if you look at the sales of E15, they are increasing when 
consumers have access.
    But the most important point there is access. A big 
impediment to that consumer access is Reid vapor pressure. So 
you grant that and you allow full-year sales. And I think that 
is one of a few impediments that we need to allow consumers to 
be able to access higher-blend and better-for-the-environment 
fuels.
    Mr. Shimkus. Mr. Nicholson.
    Mr. Nicholson. First of all, I would say that perhaps a 
national standard for a premium kind of fuel might be a 
facilitator for a market demand for such a thing. Should be, 
from my point of view, a performance-based standard. But 95 RON 
can be the regular fuel, and there could be a national standard 
for a higher one. That might be a good idea.
    We will need some kind of cooperation with regard to EPA. 
It has been briefly mentioned here. And I just wanted to point 
out that our vehicles today are certified to the 9.0 PSI RVP 
certification fuel. So it needs to be ensured that this 
requirement is met regardless of fuel composition to ensure the 
proper operation of the evaporative emission system. So we are 
going to have to work out some details, but I think it can be 
done.
    Mr. Shimkus. Mr. Jeschke.
    Mr. Jeschke. Yes. I guess, Mr. Chairman, I would just point 
to the points that I mentioned in my opening statements.
    Mr. Shimkus. Very good. Thank you.
    Mr. Thompson.
    Mr. Thompson. Quickly, I can't help myself. Access. 
Refiners, we own less than 4 percent of the retail stations. We 
don't control access. Mr. Columbus can attest to that. So this 
notion that big, bad oil is preventing access simply is not 
true.
    As far as--if I understand your question about how do we 
get to 95 RON--it is for the RFS to sunset, and in return for 
that we will be committed to a 95 RON standard.
    Mr. Shimkus. Yes. I think it was like, if 95 is a floor, 
then what would be the regulatory actions we need?
    Mr. Thompson. OK. I am sorry. Then the issue is EPA has 
mechanisms now. E15 got to the market without a big overhaul of 
the Clean Air Act. EPA has mechanisms now for certification 
fuels to get authorized. I would say go through the process.
    Mr. Shimkus. Thank you. And I will return the balance of my 
time. And I again thank my colleague, Mr. Tonko, for allowing 
us to go a second round and recognize him for 5 minutes.
    Mr. Tonko. Thank you, Mr. Chair.
    Mr. Nicholson, as I understand it, any and all cars on the 
road today can use premium fuel?
    Mr. Nicholson. You say can they use premium?
    Mr. Tonko. Yes.
    Mr. Nicholson. Well, yes, they can.
    Mr. Tonko. So when GM creates this new vehicle, this new 
engine, they are recommending use of premium. You are 
suggesting it runs it better. But what is to deny the consumer 
from fueling up with regular without damaging the engine? So 
basically if it is the choice of premium or regular, cheaper or 
more expensive, how do we guarantee that any benefits of that 
premium use will actually be realized?
    Mr. Nicholson. Well, thank you very much, and I just want 
to come back to Mr. McKinley's point. You know, consumers could 
do that today. I don't really know anybody that does that, 
because putting premium in a regular-fueled vehicle doesn't get 
you any benefit.
    What we are proposing is not premium fuel. It is a new 95 
RON high-octane fuel for new greenhouse gases.
    We still definitely have to deal with the misfueling issue. 
For example, if someone generally were to use the new 95 RON 
fuel in a 2018 model regular vehicle, there would really be no 
problem. You would have higher octane, but it would be very 
little benefit because the vehicle wasn't designed for that. So 
what we are proposing is the engines are designed and they use 
the new fuel.
    The misfueling problem we worry about is they use today's 
regular fuel in their new vehicle designed for 95 RON. That is 
a problem, and that is a remaining issue. So we have got 
misfueling risks that we need to work on.
    Mr. Tonko. So do you then require premium, not recommend 
it?
    Mr. Nicholson. We require the new 95 RON fuel. That is what 
we would do, and we need all OEMs to go together to do that. 
The analogy maybe is just the way we switched from leaded fuel 
to unleaded fuel.
    Mr. Tonko. So you are redesigning an engine that will 
require, not recommend, premium?
    Mr. Nicholson. Yes. Exactly. It will be required. And we 
are going need all the OEMs to go together to make this work.
    Mr. Tonko. OK. I yield back, Mr. Chair.
    Mr. Shimkus. The gentleman yields back his time.
    The Chair then now recognizes the gentleman from Texas, Mr. 
Flores, for 5 minutes.
    Mr. Flores. Thank you, Mr. Chairman.
    Ms. Skor, you recommended that we have a one-pound RVP 
waiver year-round for all blends of gasoline E10 and above--or, 
well, any E level. Is that correct?
    Ms. Skor. Correct.
    Mr. Flores. OK.
    Mr. Columbus, would there be any problems from your 
constituents' perspective?
    Mr. Columbus. It is not a problem for us. I mean, what we 
propose is a waiver for any fuel that has an RVP that is equal 
to or less than E10, and you can go up to E25 or so.
    There is an infrastructure problem. It is no fun to talk 
about underground storage tanks. Nobody likes that. And nobody 
sees them. And well over 60-something percent of the retail 
outlets in the United States have changed hands since the turn 
of the millennium. Most of those tanks, the owner doesn't know 
exactly what he has got.
    So the impediment to taking the fuel on through is that it 
is a violation of the Resource Conservation Recovery Act to 
store E15 or E20 in an underground storage tank that the owner 
and operator cannot demonstrate was warranted to be compatible 
with that blend.
    Mr. Flores. Let me try to come back to the original 
question, though. Is there a downside to having the RVP waiver, 
the one-pound waiver, year-round for your constituents?
    Mr. Columbus. No, sir.
    Mr. Flores. OK.
    Mr. Columbus. No, sir.
    Mr. Flores. Sorry, I didn't mean to cut you off, but I know 
the chairman will eventually.
    Mr. Nicholson, is there any problem for U.S. CAR?
    Mr. Nicholson. As I mentioned previously, our vehicles are 
certified to the 9 PSA RVP certification fuel. So it just needs 
to be ensured that this requirement is met regardless of the 
waiver or not to ensure the proper functioning of evaporative 
emissions systems.
    Mr. Flores. OK.
    Mr. Jeschke, would your constituents have any issue with 
it? I think you asked for it in your testimony, if I recall.
    Mr. Jeschke. That is correct.
    Mr. Flores. OK.
    Mr. Thompson, is there any problem with your constituency?
    Mr. Thompson. With?
    Mr. Flores. With a one-pound waiver year-round for all 
grades, all blends.
    Mr. Thompson. We are willing to entertain the idea as a 
part of a comprehensive RFS solution.
    Mr. Flores. That is where I am going with this, is if we 
talk about----
    Mr. Thompson. We would not be too keen to the idea, as has 
been reported yesterday, in exchange for nothing because--that 
is not something we are interested in.
    Mr. Flores. OK.
    Mr. Thompson. We are willing to put it all on the table 
like we are doing. We have been very candid.
    Mr. Flores. Right, and that is what I am talking about. I 
mean, I am trying to address the needs of the broadest 
constituency possible, I mean, from the environment to the 
consumer to all of your constituencies at the table.
    So you kind of introduced the next part of this question, 
and that is, if we don't do anything, we have got a status quo. 
And I think several of you have complained about the way the 
EPA has adjudicated the RFS. And so do all of you feel like a 
statutory solution is the better outcome here than where we are 
today?
    Mr. Thompson, I will start with you.
    Mr. Thompson. Absolutely.
    Mr. Flores. OK.
    Mr. Jeschke.
    Mr. Jeschke. I couldn't answer that, I guess, without 
consultation.
    Mr. Flores. OK.
    Mr. Nicholson.
    Mr. Nicholson. We believe a legislated solution will be 
really helpful to the overall process to make sure that all the 
parties are coordinated together, which is really important.
    Mr. Flores. OK.
    Ms. Skor.
    Ms. Skor. I believe that a conversation about high-octane 
fuels can--and I am glad we are having that--I also believe 
that conversation can have outside of any conversation to do 
with the Renewable Fuel Standard. This body can move us toward 
a path of a national fuel standard and doesn't need to do that 
in the context of the Renewable Fuel Standard.
    Mr. Flores. Would you repeat your answer now? Say that 
again.
    Ms. Skor. Sorry.
    Mr. Flores. I want to make sure I can drill into this one.
    Ms. Skor. I applaud the conversation today about moving 
toward a high-octane standard.
    Mr. Flores. OK.
    Ms. Skor. But this body can move toward that goal without 
touching the Renewable Fuel Standard.
    Mr. Flores. I see what you are saying. OK. All right.
    Let me say this: Is what we are looking at in terms of a 
statutory solution preferable to where we are today, where you 
have got the EPA that is doing things that you already said 
today you don't like?
    Ms. Skor. I actually would not say that a statutory action 
is preferable to the situation. I think the challenges with EPA 
are on the administrative side, and we need to make sure that 
the EPA is implementing as envisioned by Congress.
    Mr. Flores. OK. And those aren't unique to this 
administration, right? I mean, this was going on in the years 
prior to this administration.
    Ms. Skor. Yes, we have got--there are some different 
challenges most recently, yes.
    Mr. Flores. OK. All right.
    Mr. Columbus.
    Mr. Columbus. My answer is yes. My concern about what is 
going on with the status quo is, because of the things that 
have been going on, there is a significant amount of 
uncertainty in the market. And commodities markets really like 
certainty. When there is uncertainty, you see values go up, 
down, sideways. People who are involved in the system get 
caught in a box.
    So we think you should move forward, and we like the high-
octane solution as a good place to start.
    Mr. Flores. Can I indulge the chairman and the ranking 
member to give me 1 more minute?
    Mr. Shimkus. Without objection.
    Mr. Flores. OK. Thank you.
    So my final question is this. Mr. Nicholson, this will be 
for you. And I am glad to hear that there is a fighting Texas 
Aggie in terms of worldwide propulsion for GM. I can't wait for 
you all to build a 700-horsepower Tahoe for me that gets 35 
miles to the gallon.
    That said, we are talking about something that is really 
broader than the U.S. possibly here. And when we talk about 
worldwide environmental impact, you said that there is already 
a 95 RON standard in Europe.
    Mr. Nicholson. Yes.
    Mr. Flores. If we have one single nationwide standard in 
the United States for 95 RON, what other countries would likely 
follow on? Which would make U.S. CAR and U.S. refining and U.S. 
ethanol, put us all kind of on the same--and consumers--kind of 
all on the same page.
    Mr. Nicholson. Yes, thank you. As you pointed out, Europe 
has already proven that 95 RON is a great solution that 
delivers efficiency. As I said earlier, I think Americans 
deserve at least as good a fuel as the Europeans have. And I 
think, by historical patterns, let's say, there is high 
likelihood that Canadian and Mexican would, let's say, follow.
    Mr. Flores. OK. So we could set a new emissions profile for 
the entire North American continent.
    Mr. Nicholson. I think one national standard would provide 
leadership and show leadership that would likely be followed.
    Mr. Flores. OK.
    Thank you for your indulgence. I yield back. It was a great 
hearing today.
    Mr. Shimkus. Thank you. The gentleman yields back his time.
    Seeing no further Members wishing to ask questions for this 
panel, I would like to thank all of you for being here again 
today.
    Before we conclude, I would ask unanimous consent to submit 
the following document for the record: a letter from my friends 
at the Renewable Fuels Association. Without objection, so 
ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Shimkus. And pursuant to committee rules, I remind 
Members that they have 10 business days to submit additional 
questions for the record.
    I ask that witnesses submit their response within 10 days, 
except for that probably lengthy review of billions of gallons. 
That will take longer than 10 days, I would assume.
    Without objection, the subcommittee is adjourned.
    [Whereupon, at 11:35 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    

                                 [all]