[Senate Hearing 115-71]
[From the U.S. Government Publishing Office]


                                                  S. Hrg. 115-71

                   LEGISLATIVE HEARING ON S. 517, THE
                 CONSUMER AND FUEL RETAILER CHOICE ACT

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

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 14, 2017

                               __________

  Printed for the use of the Committee on Environment and Public Works
  
  
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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                     ONE HUNDRED FIFTEENTH CONGRESS
                             FIRST SESSION

                    JOHN BARRASSO, Wyoming, Chairman
JAMES M. INHOFE, Oklahoma            THOMAS R. CARPER, Delaware
SHELLEY MOORE CAPITO, West Virginia  BENJAMIN L. CARDIN, Maryland
JOHN BOOZMAN, Arkansas               BERNARD SANDERS, Vermont
ROGER WICKER, Mississippi            SHELDON WHITEHOUSE, Rhode Island
DEB FISCHER, Nebraska                JEFF MERKLEY, Oregon
JERRY MORAN, Kansas                  KIRSTEN GILLIBRAND, New York
MIKE ROUNDS, South Dakota            CORY A. BOOKER, New Jersey
JONI ERNST, Iowa                     EDWARD J. MARKEY, Massachusetts
DAN SULLIVAN, Alaska                 TAMMY DUCKWORTH, Illinois
RICHARD SHELBY, Alabama              KAMALA HARRIS, California

              Richard M. Russell, Majority Staff Director
               Gabrielle Batkin, Minority Staff Director
                            
                            
                            C O N T E N T S

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                                                                   Page

                             JUNE 14, 2017
                           OPENING STATEMENTS

Barrasso, Hon. John, U.S. Senator from the State of Wyoming......     1
Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..     3
Fischer, Hon. Deb, U.S. Senator from the State of Nebraska.......     7

                               WITNESSES

Brooke, Coleman, R., Executive Director, Advanced Biofuels 
  Business Council...............................................    16
    Prepared statement...........................................    19
Jonathan, Lewis, Senior Counsel, Clean Air Task Force............    32
    Prepared statement...........................................    34
Mike, Lorenz, Executive Vice President, Sheetz Inc...............    43
    Prepared statement...........................................    45
Todd, Teske, Chairman, President & CEO, Briggs & Stratton 
  Corporation....................................................    55
    Prepared statement...........................................    58
Janet, Yanowitz, P.E., Ph.D., Principal Engineer, Ecoengineering 
  Inc............................................................    65
    Prepared statement...........................................    67

 
 LEGISLATIVE HEARING ON S. 517, THE CONSUMER AND FUEL RETAILER CHOICE 
                                  ACT

                              ----------                              


                        WEDNESDAY, JUNE 14, 2017

                                       U.S. Senate,
                 Committee on Environment and Public Works,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:05 a.m. in 
room 406, Dirksen Senate Office Building, Hon. John Barrasso 
(chairman of the committee) presiding.
    Present: Senators Barrasso, Carper, Inhofe, Boozman, 
Fischer, Moran, Rounds, Ernst, Sullivan, Cardin, Merkley, 
Gillibrand, Booker, Markey, Duckworth, and Harris.
    Senator Barrasso. Before we start today's hearing, I would 
like to just say a few words about the shooting at the 
congressional baseball practice this morning.
    Our thoughts and prayers are with all the victims and with 
their families. Based on initial reports, the skill and the 
bravery of Congressman Scalise's security detail and the 
Capitol and local police prevented a much greater tragedy. It 
is a reminder that we should never take for granted the skill 
and dedication of those that protect all of us here in the 
Capitol, in our neighborhoods, and around the world.
    Senator Carper.
    Senator Carper. Some of us have played in the past in the 
congressional baseball games. I played in it for 10 years, and 
it is one of those rare opportunities for Democrats and 
Republicans to join together, not in conflict, not in vitriol, 
not in back-biting, but actually having fun together, and it is 
the kind of thing that we need to be doing more of rather than 
less.
    I just want to join in the words of our Chairman. We don't 
say thanks enough to the Capitol Police and, frankly, to law 
enforcement officers probably in our own States. It is just a 
reminder for us to look for the opportunities to say thank you.
    I think it was Maya Angelou who used to say people won't 
remember what we said, they won't remember what we do; they 
will always remember the way we make them feel. And we need to 
make our law enforcement officers, including the ones right 
here, feel appreciated.
    Thank you.

           OPENING STATEMENT OF HON. JOHN BARRASSO, 
             U.S. SENATOR FROM THE STATE OF WYOMING

    Senator Barrasso. Thank you, Senator Carper.
    I call this hearing to order.
    Today the Committee is going to consider S. 517, the 
Consumer and Fuel Retailer Choice Act, introduced by Senator 
Fischer.
    This bill would amend Section 211 of the Clean Air Act, 
which governs the regulation of fuels. Specifically, the bill 
would exempt fuels containing gasoline and more than 10 percent 
ethanol, fuels like E15, E20, and E30, from certain Clean Air 
Act requirements during the summer ozone season.
    The Clean Air Act sets forth standards for fuel volatility 
to control emissions of volatile organic compounds that 
evaporate from gasoline. Volatile organic compounds, or VOCs, 
and nitrogen oxide, or NOx, react in the presence of sunlight 
to create ground level ozone, or smog.
    The Clean Air Act sets forth different standards for fuel 
volatility for different areas of the Country. In general, the 
Clean Air Act sets forth more stringent fuel volatility 
requirements in areas that are not in attainment with the 
National Ambient Air Quality Standards for ozone, and then less 
stringent fuel volatility requirements for areas that are in 
attainment for those standards.
    So the principal question at today's hearing will be: What 
does the bill mean for air quality and for communities trying 
to comply with the Clean Air Act ozone standards? Another 
important question at today's hearing will be: Will this bill 
result in more corn ethanol production? And, if so, what are 
the impacts of additional corn ethanol production?
    According to one of our witnesses, corn ethanol has 
accounted for about 87 percent of the biofuels used to meet the 
renewable fuel standard over the last 10 years. Yesterday, the 
Advanced Biofuels Association wrote that it has deep concerns 
that the legislation will be detrimental to the future of 
advanced biofuels in the United States.
    I think we also need to ask what does the bill mean for 
consumers. In addition to exempting fuels like E15, E20, and 
E30 from certain Clean Air Act requirements, this bill would 
codify in statute the EPA's 2010 and 2011 decisions to approve 
E15 for use in model year 2001 and newer vehicles.
    In Wyoming, folks want fuel with less, not more, ethanol. 
They have seen what ethanol does to small engines and boat 
engines. They worry what fuel with more ethanol will do to 
their car engines and who will be stuck paying the bill. 
Consumers, manufacturers, and others are deeply skeptical about 
EPA's decision to approve E15 for use in the 2001 and newer 
vehicles. Congress, I believe, should not codify it.
    No one should be surprised that I don't support S. 517. But 
S. 517 deserves a full and fair hearing before this Committee.
    I also can't end my remarks without mentioning another part 
of Section 211 of the Clean Air Act, specifically the renewable 
fuel standard. Now, I believe the renewable fuel standard is 
broken, and EPA is not in a position to fix it. The program is 
causing distortions in the marketplace and damage to the 
environment. I believe it needs to be fixed.
    With that, I will now turn to the Ranking Member of the 
Committee for his remarks.
    Senator Carper.

          OPENING STATEMENT OF HON. THOMAS R. CARPER, 
            U.S. SENATOR FROM THE STATE OF DELAWARE

    Senator Carper. So on this legislation we just mark you as 
undecided?
    Senator Barrasso. But still your friend.
    Senator Carper. I just hope you will still be Deb's friend 
too.
    [Laughter.]
    Senator Carper. Well, thanks, Mr. Chairman, for pulling 
this together, and to the Senator from Nebraska for offering 
this legislation. Giving us something to talk about, something 
important to talk about.
    I want to thank all of our witnesses for joining us today, 
for sharing your perspectives with us.
    Before I really get started, I want to take a moment or two 
just to remind folks how we got here in the first place. Not in 
this room, but on this subject.
    In 2007, our Nation's energy future was not bright. If you 
will recall, U.S. consumption of gasoline and diesel was 
expected to grow exponentially, and the supply of oil to feed 
that growth was expected to be imported from other nations, 
many of which, frankly, didn't like us a whole lot.
    That is why, in 2007, Congress took a number of steps to 
try to change our energy future, and in that year Congress 
increased the fuel efficiency standards for cars, for trucks, 
for vans for the first time in over 30 years.
    As someone who worked very hard with Senator Ted Stevens, 
with Senator Diane Feinstein, with our colleague, then 
Congressman Ed Markey, to help us find an agreement, I am very 
proud of this achievement. Our efforts laid the groundwork for 
future vehicle efficiency increases by the Obama 
administration.
    In 2007, Congress also amended the Clean Air Act to more 
than double the domestic biofuel mandate to 36 billion gallons 
by 2022. We included new incentives for advanced fuels that 
were intended to be better for the environment and were not 
derived from the food that we eat or the food our chickens and 
our cattle eat.
    Since 2007, we have seen a dramatic change in the energy 
trend lines and our energy future looks better, brighter than 
it has in decades.
    Today, thanks to the groundwork laid in 2007, consumers pay 
less at the pump, vehicles are cleaner and more efficient, and 
our Nation is no longer a net importer of oil.
    I continue to believe that biofuels, if done correctly, can 
give us an environmentally friendly option, friendlier option 
to reduce our dependence on fossil fuels and our dependence on 
foreign energy production. However, we cannot ignore any 
unintended consequences, be they economic or environmental, of 
increasing our biofuel mandate.
    The bipartisan bill before us today assumes gasoline with 
ethanol blends greater than 10 percent contribute to ozone 
pollution no more or no less than gasoline blends with 10 
percent ethanol and, therefore, the fuel should be treated the 
same under the Clean Air Act.
    My first and foremost concern is making sure that 
assumption is correct, and I suspect that everybody feels that 
way. Representing a downwind State with ozone pollution 
problems, I want to make sure that passing this legislation 
will not increase ozone pollution that would make it more 
difficult for my State and other States that live at the end of 
America's tailpipe to reach attainment.
    Along this line, States with extreme ozone concerns like my 
State, Delaware, have the authority to regulate the fuels sold 
within our borders, and I want to make sure this legislation 
does not inhibit States' rights to address ozone pollution.
    My second concern is in regard to advanced biofuels. I have 
been told that this legislation would increase market access 
opportunities for higher blends of ethanol by allowing 
retailers to sell E15 and other higher ethanol fuel blends 
year-round. I just want to make sure that advanced biofuels, 
not necessarily traditional corn ethanol, benefit from this 
increased market share.
    My third and final concern is related to the volatility in 
the markets used by refineries complying with the renewable 
fuel standards, known as the Renewable Identification Number, 
RIN, market. In the past 4 years, spikes in the RIN market have 
negatively impacted merchant refineries around the Country like 
one in Delaware City, Delaware, and others along the East 
Coast. I am interest in learning today what, if any, impact 
this bill may have on the RIN market and what more we can do to 
add transparency and certainty to what is really an opaque 
market there.
    I started with a little history lesson. Now let me conclude 
with just a touch more of history, and that is the history of 
how this legislation found its way before us today.
    I understand that this legislation has come before our 
Committee as part of an agreement among Republican Senators 
with respect to Senate consideration of another bill, one that 
is not this Committee's jurisdiction. So I just want to make 
clear to my colleagues that I was not privy to that agreement, 
and at this time I have not committed to any action with 
respect to this legislation that may have been discussed among 
our Republican colleagues, nor have I made commitments 
regarding our Committee's possible consideration of this bill 
in the future.
    Having said that, when you have a bill like this that is an 
important bill and purports to do and intends to do good 
things, and is offered, I think, in good intent and with 
bipartisan support, and I applaud the author of the bill for 
gathering that kind of support. This is the way we ought to 
move a bill, work a bill. And when there are differences of 
opinion, we ought to have a hearing and we ought to have people 
who can express well all the different opinions, and then we 
will make our decisions. So this is the right way to do things.
    I am happy that we are here and look forward to learning as 
much as we can.
    Thank you all.
    [The prepared statement of Senator Carper follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Barrasso. Thank you, Senator Carper.
    Senator Fischer.

STATEMENT OF HON. DEB FISCHER, A UNITED STATES SENATOR FROM THE 
                       STATE OF NEBRASKA

    Senator Fischer. Chairman Barrasso and Ranking Member 
Carper, I thank you for convening today's legislative hearing 
to discuss bipartisan legislation that I introduced with 
Senators Donnelly and Grassley, and that is S. 517, the 
Consumer and Fuel Retailer Choice Act.
    Thank you to my EPW colleagues, Senator Ernst and Rounds, 
Duckworth and Moran, for supporting this important legislation.
    I would also like to thank the witness panel today for 
their willingness to share their time and experience with our 
Committee this morning.
    When I first arrived in the U.S. Senate, I attended a 
meeting in Senator Klobuchar's office, and it was to discuss 
renewable energy and fuels; and several of my colleagues were 
there, Senator Durbin, Harkin, and Franken, to name a few. It 
was my first bipartisan meeting in the U.S. Senate. And in that 
meeting we lay the groundwork for including renewable in our 
Nation's ``all of the above'' energy strategy.
    We made a strong connection. We all wanted to come together 
and work across the aisle to advance environmentally friendly 
fuel options for American families.
    The bill before us today, the Consumer and Fuel Retailer 
Choice Act, is a renewable energy bill. It would extend the 1 
pound Reid vapor pressure waiver, more commonly referred to as 
the RVP waiver, to E15. Extending the RVP waiver would allow 
this fuel to be sold year-round. Currently, it is illegal for 
E15 to be sold during the busy summer travel season, from June 
1st to September 15th. Consumers who want to purchase it during 
that time, they can't buy it.
    In 1990, the EPA granted a 1 pound RVP waiver to E10. 
However, this waiver does not apply to E15 during the summer, 
even though it has a lower RVP and burns more cleanly. As a 
result, fuel retailers are required to change fuel labels at 
the pumps before and after the summer season. This leads to 
increased costs, and it is also greater confusion for 
consumers.
    E15 is a cleaner, higher octane fuel that has been approved 
by the EPA for use in passenger cars, light duty trucks, and 
medium duty passenger vehicles built after 2001. Currently, E15 
is offered to consumers in 29 States, including Wyoming, South 
Dakota, Nebraska, Kansas, Oklahoma, Iowa, Arkansas, Illinois, 
Alabama, Mississippi, and West Virginia.
    In Nebraska, we are known for supporting renewable fuel, so 
it might surprise you that Illinois, West Virginia, Minnesota, 
Texas, and many other States, well, they sell more E15 than my 
home State does.
    The Consumer Fuel Retailer Choice Act would expand consumer 
choice and eliminate confusion at the pump. It does so by 
ensuring a consistently labeled product is offered year-round, 
which would decrease the occurrence of misfuelings.
    S. 517 will also provide relief for our retailers who have 
been forced to change fuel pump labels twice a year for a fuel 
that does not change.
    Good business decisions rely on accurate information and 
stability. Providing the RVP waiver for E15 would ensure that 
retailers have the certainty they need to make sound business 
decisions that will lead to greater economic growth 
opportunities in our local communities.
    We all want clean air and clean water, and renewable fuels 
help us protect our world for future generations. Renewable 
fuels reduce greenhouse gas impacts by an average of 43 percent 
over gasoline. E15 has lower evaporative emissions than E10. It 
is a more environmentally friendly burning fuel.
    Mr. Chairman, I have letters of support from multiple 
stakeholders, including the National Association of Convenience 
Stores, E15 retailers, Prime the Pump, the National Corn 
Growers Association, and Nebraska agriculture leaders, and I 
would ask unanimous consent that these letters be included in 
the record.
    Senator Barrasso. Without objection.
    [The referenced information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Fischer. Thank you, sir.
    Renewable solutions are out there to fulfill our Nation's 
energy needs, and E15 is one of them. American families should 
be able to decide which fuel they put into their vehicles. Our 
bill would ensure retailers can offer consumers consistent 
choices at the pump year-round, with less confusion and red 
tape.
    So I am looking forward to today's discussion and I thank 
my colleagues for joining me on this legislation.
    And thank you, Mr. Chairman, for holding the hearing.
    Senator Barrasso. Thank you very much, Senator Fischer.
    We are now going to hear from our witnesses.
    Joining us today is Brooke Coleman, who is the Executive 
Director of the Advanced Biofuels Business Council; Jonathan 
Lewis, who is the Senior Counsel at the Clean Air Task Force; 
Mike Lorenz, who is Executive Vice President of Sheetz; Todd 
Teske, who is the Chairman, President, and CEO of Briggs & 
Stratton; and Janet Yanowitz, who is the Principal Engineer at 
EcoEngineering.
    I would like to remind the witnesses that your full 
testimony will be made part of the official hearing record, so 
please try to keep your statements to 5 minutes so that we may 
have time for questions. I look forward to hearing the 
testimony.
    Let us begin with Mr. Coleman.

 STATEMENT OF R. BROOKE COLEMAN, EXECUTIVE DIRECTOR, ADVANCED 
                   BIOFUELS BUSINESS COUNCIL

    Mr. Coleman. Thank you. Good morning, Chairman Barrasso, 
Ranking Member Carper, and members of the Committee. My name is 
Brooke Coleman. I am the Executive Director of an organization 
called the Advanced Biofuels Business Council. I want to thank 
you for the opportunity to testify today. We represent 
worldwide leaders in the effort to develop and commercialize 
the next generation of advanced and cellulosic biofuels.
    I have submitted a fairly lengthy written testimony that I 
will not read back to you, so I want to just hit on a couple of 
top-line points.
    Our Council represents a wide variety of companies that 
produce a wide variety of innovative American products, whether 
it is biochemicals, biogas, biodiesel, cellulosic ethanol. But 
today's hearing is about ethanol, so I want to focus on the 
ethanol industry.
    This is a very exciting time for the ethanol industry. We 
have built more than 200 ethanol biorefineries in this Country 
in little more than 25 or 30 years. We displaced the equivalent 
of Saudi Arabia, plus, it is probably a smaller OPEC country in 
terms of foreign oil dependence, and we now are innovating in 
cellulosic ethanol, which is the industry that I represent. In 
Iowa, there are commercial scale cellulosic biorefineries in 
Galva, in Emmetsburg, we call it DSM, and then DuPont's 
facility, of course, in Nevada. Nebraska is home to the largest 
advanced enzyme facility in the Country.
    But with a growing industry comes industry challenge, and 
one challenge that new technologies face, whether it is clean 
energy, renewable energy, or anything else, is regulatory 
readiness. In fuels, regulations in policy really matter, 
because we don't have the benefit of selling to a competitive 
free market; we have to ask the oil industry to use our 
product. Our fuels can only go as far as policy and regulations 
allow them to go.
    We all want to get to the point where we have a free 
market, but we are not there yet.
    S. 517 essentially cures a regulatory glitch. Vapor 
pressure in gasoline is controlled for evaporation, and 
evaporation contributes to smog. Ten percent ethanol blends are 
allowed a 1 pound waiver in the summer because our lower 
tailpipe emissions offset the small increased emissions from 
smog.
    And I won't get into too much detail because Janet is going 
to do that, I believe, and she is the expert, but the glitch is 
that higher ethanol blends like E15, while being cleaner and 
actually lower vapor pressure, are not granted the same waiver.
    So while S. 517 will increase the availability of what I 
think, and I think will be proven, to be a cleaner, cheaper, 
lower carbon American-made and renewable fuel, it is my job to 
focus on how important this would be for cellulosic ethanol. 
And I want to emphasize that a little bit now.
    Cellulosic ethanol technology is commercially ready. The 
issue that we have right now is the market is saturated, and 
project finance, and I won't try to bore you, at least, but 
project finance, if you go to a bank or a lender and say you 
want to build a biorefinery, it is a back-to-front 
conversation. You don't go and you say I have all this fuel; 
can we find a place for it. No one is going to fund that. You 
go and you say this is guaranteed demand, this is our demand 
opportunity, this is our market access, and will you finance 
that.
    You can't go and say, well, maybe if they fix the RVP 
thing, we will have a market opportunity. No one is going to 
fund that.
    So what S. 517 essentially does is it provides market 
headroom for cellulosic ethanol right at the point where we 
need it, and roughly 20 companies--I believe a letter was 
mentioned by the Chairman. There is a point where people who 
run trade associations, and that includes myself, should be 
sort of pushed to the side. Twenty company executives signed a 
letter saying they support S. 517 for the very reason that it 
will unlock project finance in an industry that is very, very 
important and growing in this Country.
    I think I am going to use the time left to discuss very, 
very clearly what this proposal is, and in some cases is not.
    I have said that the proposal would allow cleaner, cheaper 
fuel to be available all year. That is true. It would 
undoubtedly accelerate the commercialization of the lowest 
carbon fuel in the world. Our fuels are anywhere from 80 to 
more than 100 percent better than gasoline from a carbon 
perspective. Think about that. Some of our fuels are carbon 
sinks. It would further reduce U.S. dependence on foreign oil 
and most importantly, perhaps, keep American fuel consumer 
dollars circulating in our Country and our States, instead of 
going overseas.
    But just as important, here is what S. 517 does not do. It 
does not introduce a new fuel that is alien to consumers. We 
have used this, as Senator Fischer said, in 29 States. It does 
not replace current blends and, therefore, does not require 
small engine manufacturers to re-spec their engines, because 
E10 and E0 will still be available where it is available now. 
And it does not change current law in reformulated gasoline 
areas, which does not allow waivers of any kind, and it does 
not in any way change California law, where they have the 
special authority to regulate their fuel statewide. They will 
be making their own decisions with regard to E15.
    It is extremely rare, in my opinion, not sure if I have 
seen it in my 20 years doing biofuel work, to have the 
opportunity to do so much with such a small and simple 
regulatory fix.
    Thank you for reviewing this proposal, and we humbly ask 
you to support S. 517. Thank you, and I look forward to your 
questions.
    [The prepared statement of Mr. Coleman follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Barrasso. Thank you very much for your testimony.
    Mr. Lewis.

  STATEMENT OF JONATHAN LEWIS, SENIOR COUNSEL, CLEAN AIR TASK 
                             FORCE

    Mr. Lewis. Good morning. My name is Jonathan Lewis. I am 
Senior Counsel at the Clean Air Task Force, which is a 
nonprofit organization that works to help safeguard against the 
worst impacts of climate change by catalyzing the rapid global 
development and deployment of low carbon energy technologies 
through research and analysis, public advocacy leadership, and 
partnership with the private sector.
    I want to thank the Committee for inviting me to testify 
today and for holding this hearing. Any efforts that could 
result in amendments to the Clean Air Act should proceed 
through regular order so that the potential consequences for 
public health and the environment are fully considered.
    The Clean Air Task Force has several concerns about E15, 
but my comments today focus on two of them: the potential 
climate impact of additional ethanol production and the 
possibility that greater use of E15 will increase ozone 
formation.
    Allowing E15 to be used year-round would expand the market 
for ethanol. Some, maybe most, of that new market space would 
be filled by corn ethanol. An unfortunate lesson from the 
renewable fuel standard is that creating a market for advanced, 
low-carbon ethanol offers no guaranty that such fuels will be 
developed and deployed in significant volumes.
    Ten years after Congress created a huge market for 
cellulosic biofuels, production levels for cellulosic ethanol 
remain miniscule. Meanwhile, corn ethanol continues to dominate 
the RFS program.
    Increased corn ethanol production is bad for our climate. 
According to the Environmental Protection Agency's own data, 
the additional corn ethanol produced in response to the 
expansion of the RFS has higher lifecycle greenhouse gas 
emissions than gasoline.
    The National Research Council looked at EPA lifecycle 
emissions data and reported that corn ethanol produced in 2012 
or 2017 has ``lifecycle GHG emissions higher than gasoline 
unless it is produced in a biorefinery that uses biomass as a 
heat source. Thus, according to EPA's own estimates, corn grain 
ethanol produced in 2011, which is almost exclusively made in 
biorefineries using natural gas as a heat source, is a higher 
emitter of GHG than gasoline.''
    The ethanol industry argues that EPA's data are flawed and 
that corn ethanol's lifecycle greenhouse gas emissions are 
significantly less than those of gasoline.
    Nearly all the studies that reach this conclusion 
dramatically undercut the emissions from RFS-driven land use 
changes.
    We need low carbon liquid fuels to de-carbonize the 
transportation sector. Biofuels can play a role in this effort, 
particularly with respect to aviation. But by expanding the use 
of E15 without first demonstrating the capacity to produce an 
adequate supply of climate-beneficial biofuels, this bill could 
undermine climate change mitigation efforts by encouraging 
additional production of corn ethanol.
    We are also concerned by E15's potential impact on ozone 
formation. Ozone forms in VOCs and NOx, and mix in the 
atmosphere in the presence of sunlight. Ozone is particularly 
dangerous during summer months, when sunlight is more abundant 
and when hotter temperatures can worsen the incidents and 
severity of diseases that are aggravated by ozone pollution, 
such as asthma and emphysema.
    Adding ethanol to gasoline affects the emissions of both 
VOCs and NOx. E15 is slightly less volatile than E10, so a 
switch from E10 to E15 might result in a slight reduction in 
VOC emissions.
    NOx formation is more straightforward. If the amount of 
ethanol blended into gasoline is increased, the oxygen content 
of the fuel also increases. Higher oxygen levels typically 
result in hotter combustion temperatures, which in turn 
typically result in higher NOx formation.
    Modern light duty engines, especially those that have been 
built since 2007, have computerized fuel injection systems that 
work with a through-way catalyst to limit the release of NOx 
from the tailpipe. Older cars that do not have this emission 
control technology, as well as newer cars in which the emission 
controls may have degraded, are less effective at capturing the 
additional NOx that is created when they burn E15.
    The potential additional NOx emissions are important 
because, according to a May 2017 study by EPA, ozone formation 
in most parts of the Country is much more sensitive to changes 
in NOx emissions than it is to changes in VOC emissions. The 
EPA analysis finds that in most cities the impact of NOx 
reductions on ozone formation is up to five times greater than 
the impact of comparable VOC reductions. In non-urban areas, 
EPA found that NOx reductions are over 10 times more impactful 
than VOC reductions.
    Small increases in ozone due to increased NOx emissions 
from summertime use of E15 might be enough to push or keep some 
areas over the ozone standard, triggering adverse health 
impacts and additional control requirements. We have identified 
31 potentially impacted areas, including 5 areas in California; 
3 areas in Arizona, Wisconsin, Michigan, Indiana, Pennsylvania, 
and Ohio; and most of the major cities in the northeast United 
States.
    Before legislation that allows the sale of E15 during 
summer ozone season is considered, we urge that more research 
be conducted to better understand how the use of E15 affects 
NOx emissions from a wide range of engine types, engine model 
years, and engine usage patterns. In other words, we should 
look before we leap. The last thing that areas that are 
otherwise on the verge of meeting their ozone targets need is 
the introduction of additional NOx into their airsheds.
    Thank you.
    [The prepared statement of Mr. Lewis follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Barrasso. Thank you very much for your testimony.
    Mr. Lorenz.

STATEMENT OF MIKE LORENZ, EXECUTIVE VICE PRESIDENT, SHEETZ INC.

    Mr. Lorenz. Chairman Barrasso, Ranking Member Carper, 
members of the Committee on the Environment and Public Works, 
thank you for the opportunity to testify today in strong 
support of legislation that allows fuel retailers across the 
Country to sell a fuel product approved by the Federal 
Government year-round, just like every other transportation 
fuel on the market.
    My name is Mike Lorenz. I am the Executive Vice President 
of Petroleum Supply at Sheetz, a family owned convenience store 
chain based in Altoona, Pennsylvania, with 550 stores in six 
States. I have spent the last 17 years of my career with Sheetz 
managing our fuel supply strategy. Prior to joining Sheetz, I 
worked 22 years at Mobil Oil.
    For more than 60 years, our mission at Sheetz has been to 
meet the needs of the customer on the go; offer them a variety 
of high quality products and let them choose. We don't create 
customer demand; we work hard to satisfy it. Their purchases, 
much like votes, show us which products they prefer strongly.
    Recently, we expanded our fuel options, providing customers 
with the ability to purchase a 15 percent blend of ethanol, 
known as E15, at more than 190 of our stores, and we are adding 
more stores each month. We did this on a voluntary basis 
because we believe that providing more fuel options such as 
E15, which is lower cost, higher performing, and better for the 
environment, is what our customers want.
    So far, I can tell you that offering E15 at our stores is 
working. Consumers are purchasing it because it is three to ten 
cents a gallon less than regular gasoline and is 88 octane 
instead of 87.
    That is what motivates fuel purchases: cost and 
performance. They don't care about fuel volatility, ethanol 
concentration, or the public policy behind renewable fuels. And 
after millions of E15 transactions by thousands of customers 
purchasing millions of gallons and driving millions of miles, 
one thing is clear: we have not had a single customer complaint 
or any cases of misfueling.
    But this has been a major challenge, not being able to sell 
E15 in the summer to the same customers that we sell to the 
rest of the year. In addition to lost sales during the summer, 
relabeling will cost retailers roughly $2 million this year, 
and possibly $5 million next year.
    The inconsistency creates confusion and undermines the 
integrity of this product, and could also lead to potential 
misfueling. Frankly, we think this problem is nothing more than 
a technicality that can be easily fixed.
    This legislation fully addresses this issue, simply 
providing E15 the same vapor pressure treatment that is given 
regular gasoline, and ultimately lets the consumer choose what 
fuel works best for them.
    I want to thank Senators Fischer, Ernst, Rounds, Moran, and 
Duckworth for their leadership on this issue and their support 
of S. 517, the Consumer and Fuel Retailer Choice Act.
    Sheetz is not selling E15 because of ethanol producers. We 
sell it because there is consumer demand for the fuel. We don't 
support this legislation because it is backed by corn farmers; 
rather, we support this legislation because it allows us to 
sell a legal fuel to customers that want to buy it year-round.
    We still offer other fuels, including E10, a fuel 
specifically warranted for small engines, marine, off-road, and 
motorcycle engines. We believe adding a lower cost, higher 
performing fuel to our offer allows Sheetz to provide superior 
selection and service to those who visit our stores.
    I want to again thank the Committee for this opportunity to 
appear today. I want to close by saying that this bill is 
simply about fixing a regulation that is almost 30 years old, 
and prevents retailers like Sheetz from offering a legal fuel 
year-round, just as we do with regular gasoline.
    I would be happy to answer questions.
    [The prepared statement of Mr. Lorenz follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Barrasso. Thank you very much for your testimony. 
We appreciate you being here today.
    Mr. Teske.

 STATEMENT OF TODD TESKE, CHAIRMAN, PRESIDENT & CEO, BRIGGS & 
                      STRATTON CORPORATION

    Mr. Teske. Chairman Barrasso, Senator Carper, distinguished 
members of the Committee, thank you for inviting me here today 
to discuss the renewable fuel standard and the Consumer Fuel 
and Retailer Choice Act on behalf of Briggs & Stratton.
    My name is Todd Teske. I am Chairman, President, and CEO of 
Briggs & Stratton. Today I hope to offer insight to our 
experience with the renewable fuel standard and specifically S. 
517. I have provided more detailed written testimony, which I 
would ask to be included in the record.
    Briggs & Stratton is a 109-year-old U.S. manufacturer 
headquartered in Milwaukee, Wisconsin. We have U.S. 
manufacturing sites in New York, Georgia, Alabama, Missouri, 
Kentucky, Wisconsin, and Nebraska. Briggs & Stratton is the 
world's largest producer of small air-cooled gasoline engines 
for outdoor power equipment, and we are a leading designer, 
manufacturer, and marketer of power generation, lawn and 
garden, turf care, and jobsite products. If you have a garage, 
you probably have a Briggs & Stratton product in it right now.
    We have 5,500 employees worldwide, with approximately 5,100 
of them right here in the U.S. We take pride in producing over 
85 percent of our products and 72 percent of our sales here in 
the U.S.
    Briggs & Stratton has a longstanding commitment protecting 
our environment. Since 1995, we have reduced our emissions by 
75 percent. In 2007, we pledged with the Department of Energy 
to reduce our energy consumption by 25 percent over 10 years, 
and I am pleased to say that we were able to achieve that goal.
    Keeping our commitment to the environment in mind, I 
believe that the environmental goals underpinning the RFS and 
E15 were laudable. However, it has since become apparent that 
these goals are unlikely to ever be met and, more importantly, 
may have significant unintended consequences for consumers.
    I would like to briefly outline several concerns I have 
with the RFS and the increased availability of E15.
    Extensive research has shown that the use of E15 in small 
non-road engines can have harmful and costly consequences, and 
the EPA has confirmed these findings. We have conducted our own 
studies that show that as the level in gasoline increases, the 
level of alcohol increases as well. Alcohol contains inherent 
properties that cause problems with engines.
    By definition, E15 would have an alcohol content of 0 to 15 
percent, which would result in great difficulty in engines 
meeting both emissions and performance requirements. 
Furthermore, the Department of Energy's testing of E15 in non-
road engines found that small engines experienced a variety of 
difficulties with higher ethanol blends. More than half of the 
engines tested behaved poorly or erratically, according to the 
DOE's report, which caused the EPA to exclude small engines 
from the E15 waiver. This exclusion, however, has not led to 
decreased problems due to consumer misfueling.
    The EPA has issued a mandatory warning label for pumps that 
distribute E15. While we appreciate this preventative effort, 
research has shown that warning labels are not effective in 
preventing misfueling, and consumers continue to use E15 
despite the risks.
    Behavioral studies have shown that consumers at the pump 
overwhelmingly favor the lowest priced fuel. In the 1970's and 
1980's, the U.S. made the transition from leaded to unleaded 
gasoline, and new cars were designed with different fuel tanks 
that were incompatible with older, leaded gasoline pumps. It 
was found that even with this physical obstruction in place, 
consumers would still opt for the lowest priced fuel option in 
their car. If a physical obstacle could not deter consumers 
from using the correct gasoline, can we assume that a sticker 
is going to prevent misfueling?
    At Briggs & Stratton, we have partnered with other small 
engine manufacturers and retailers across the Country to 
educate consumers on proper fueling. Together, we created the 
``Look Before You Pump'' campaign to assist consumers when 
purchasing new small engine products. While we are happy to do 
our part to educate the public on the negative impact ethanol 
can have on our products, we do not believe that we should 
solely be responsible for this effort. It is going to take a 
concerted effort with industry and Government to fully educate 
the public on the risks of misfueling with ethanol.
    Last, small engines and outdoor power equipment are not 
designed, warranted, or EPA approved to operate on gasoline 
containing more than 10 percent ethanol. This is why we fully 
support the development of advanced biofuels as a solution. 
Biofuels from other feedstock are drop-in fuels. Drop-in fuels, 
by definition, meet existing gasoline specifications, are not 
ready to drop in to infrastructure, minimizing compatibility 
issues. We have conducted extensive testing with a drop-in 
isobutanol blended gasoline, which demonstrated evidence that 
such fuels can provide the performance and operational criteria 
necessary without demonstrating any negative effects.
    I strongly support further research into these alternative 
fuels that are effective and do not damage our products. The 
Consumer Fuel and Retailer Choice Act would allow retailers 
across the Country to sell E15 year-round. Under this 
legislation, it is highly likely that consumers would misfuel 
small engines with even more frequency. Misfueling would lead 
to significant economic harm for consumers as these small 
engines fail. Reliance on warning labels would do little to 
prevent misfueling, despite our best efforts at education and 
prevention, and we believe the risk of misfueling would be 
substantial, and damage to our products would be irreversible. 
This puts us at risk to lose decades of trust from consumers 
and negatively impact our reputation.
    For these reasons, Briggs & Stratton opposes S. 517 as 
currently written. We encourage the Committee to work together 
in a bipartisan way to draft new legislation that protects 
consumers. We recommend that any reform legislation rescind the 
partial waiver for E15 and establish gasoline blended with up 
to 10 percent ethanol as the general purpose domestic fuel. I 
also encourage the Committee to pursue policies that encourage 
research into the next generation of renewable fuels that are 
safe, proven, and for all types of engines.
    Mr. Chairman, Senator Carper, thank you for this 
opportunity to testify today. I appreciate the Committee 
looking into the complicated issues dealing with the RFS, and I 
would be happy to answer any questions you might have.
    [The prepared statement of Mr. Teske follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Barrasso. Thank you so much for your testimony.
    Ms. Yanowitz.

 STATEMENT OF JANET YANOWITZ, P.E., PH.D., PRINCIPAL ENGINEER, 
                      ECOENGINEERING INC.

    Ms. Yanowitz. Chairman Barrasso, Ranking Member Carper, and 
distinguished Committee members, thank you for the opportunity 
to speak here today. It is an honor. I am an engineer that has 
worked on the emissions from biofuels for almost two decades.
    Today you are evaluating whether to allow E15, a fuel which 
is 15 percent ethanol and 85 percent petroleum, to have the 
same 1 PSI waiver currently permitted for E10. At this time, 
virtually all the fuel sold in the U.S. is E10, and extending 
the 1 PSI waiver to all ethanol fuels will encourage the use of 
E15 in place of E10. I will be discussing the air emissions 
impact of this change.
    As any scientist who has spent time on vehicle emissions 
will tell you, the issue is complicated and different vehicles 
can behave quite differently. However, for those of you who are 
listening for the bottom line, replacing E10 with E15 would be 
a small change with minimal emissions impacts, according to the 
best available emissions test data.
    On average, the total tailpipe organic emissions and the 
ozone forming potential of those organics will be expected to 
decrease or stay the same, and nitrogen oxide, or NOx, which 
also impact the ozone formation, are expected to be unchanged. 
Ethanol and aldehyde emissions will likely increase and carbon 
monoxide and benzene will decrease.
    This analysis is based on studies reported in the peer-
reviewed scientific literature and by the coalition of 
petroleum and automobile companies that make up the 
Coordinating Research Council, or CRC. More information on 
these studies is included in my written submittal, but I will 
quickly describe the most significant so you get a feeling for 
the size of the studies and the results.
    In 2008, a team comprised of scientists from three national 
laboratories conducted emissions testing on 16 vehicles using 
E0, E10, E15, and E20. The found that increasing the ethanol 
content resulted in no significant effect on NOx or organic 
tailpipe emissions, although the acid aldehyde emissions 
increased. Similar results on three vehicles were reported by 
Karavalakis and his colleagues at UC Riverside. The CRC also 
reported that increased ethanol content up to 20 percent 
ethanol reduced CO emissions, although the same study reported 
an increase in NOx emissions with higher ethanol content.
    An analysis of the 12 2001 newer vehicles included in 
another DOE study found that non-methane hydrocarbons, carbon 
monoxide and NOx trended slightly lower with higher ethanol 
contents. In another study conducted by a subcontractor to 
NREL, non-methane hydrocarbons and carbon monoxide emissions 
were either equal or lower for six vehicles aged and then 
emissions tested on E15 versus E0, and NOx emissions were 
unchanged.
    The total amount of organics emitted provides a rough gage 
of the overall forming potential of the emissions, but not all 
organics are equally prone to reacting to form ozone. Thus, 
studies which considered the reactivity of the specific 
organics released are more accurate at determining the ozone 
forming potential of the emissions. The UC Riverside team did 
this analysis for emissions from two 2012 model year vehicles 
and found that the ozone reactivity for emissions from E15 were 
less than those from E10.
    In addition to tailpipe emissions, vehicles emit additional 
organic compounds to the atmosphere via evaporation. There have 
been no significant studies comparing evaporation emissions of 
E15 to E10, but two studies made with E20 and E10 show mixed 
results, suggesting that increases in evaporative emissions 
between vehicles using E10 and E15 of the same vapor pressure 
are small or non-existent.
    In another study, limited data from the testing of four 
vehicles using E0 and E15 showed no significant differences 
between the two fuels in evaporative emissions.
    In conclusion, the available emissions test data indicates 
that replacing E10 with an E15 of the same vapor pressure will 
cause a slight decrease in emissions of ozone-forming organic 
compounds and carbon monoxide, and no change in NOx.
    Thank you.
    [The prepared statement of Ms. Yanowitz follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Barrasso. Well, thank you all for your testimony. 
We appreciate you all being here today.
    Mr. Teske, let me start with you.
    Earlier this week, the National Marine Manufacturers 
Association, the American Sports Fishing Association, Boat USA, 
Center for Sports Fishing Policy, Marine Retailers Association 
of the Americas, Theodore Roosevelt Conservation Partnership 
sent the Committee a letter expressing concerns about how E15 
can contribute to engine failure. I don't know if you have seen 
that letter.
    Mr. Teske. I have.
    Senator Barrasso. Do you share the concerns of these 
groups?
    Mr. Teske. We do, because ethanol or alcohol does a couple 
different things to an engine; it doesn't matter whether it is 
a marine engine or a small lawnmower engine. Basically, it will 
fail over time if you put E15 in them, in a relatively short 
period of time. And in many cases, it has to do with the fact 
that enleanment, which means that the engine will run hotter, 
will start to distort the components in the engines. So it is 
no different, really, between any of the engines you mentioned, 
with marine or our engines at Briggs & Stratton.
    Senator Barrasso. Thank you.
    Dr. Yanowitz, I have a couple of studies here that you have 
put forth in terms of performance, compatibility and 
environmental impacts of ethanol. Were they funded by the 
ethanol industry? I am looking at the March 2012 study prepared 
for the Renewable Fuels Association, funded by the Renewable 
Fuels Association in May 2015, prepared----
    Ms. Yanowitz. Seems like you have answered your question. 
Yes, they were.
    Senator Barrasso. OK, thank you.
    Mr. Lewis, in your testimony you explained that E15, when 
compared to E10, may produce lower emissions of the VOCs, but 
likely to produce higher emissions of NOx. So what does that 
mean in terms of ozone formation?
    Mr. Lewis. There are some studies that show slightly higher 
NOx emissions. It is not a large effect, but it is something 
that we are concerned about because, as I mentioned earlier, in 
the vast majority of areas of the Country where ozone is a 
problem, a slight change in NOx emissions or change in NOx 
emissions is going to have a much more significant impact on 
ozone formation than a change in VOC emissions.
    None of the studies that we have looked at have looked at 
the full range of different vehicle types, the vintage of those 
vehicles or the miles that they are driven, and consider what 
NOx impacts from those vehicles might be on ozone formation, 
but it is definitely an area of concern for us given the 
direction that NOx formation has on ozone.
    Senator Barrasso. We had talked earlier in my opening 
comments about NOx emissions and the potential to push regions 
of the Country which are currently in attainment with the 
National Ambient Air Quality Standards for ozone pushing them 
into non-attainment, Mr. Lewis. So do you believe that these 
additional potential NOx emissions have the potential to 
prevent regions of the Country which are currently in non-
attainment from getting into attainment, as we look at the 
impact of that? And which regions of the Country might be most 
vulnerable?
    Mr. Lewis. In our written testimony, we identified 31 
regions around the Country that are either just above or just 
below the 2008 ozone standard and the 2015 ozone standard, and 
in those areas they are making heroic efforts to bring down 
ozone levels to attain those standards, and slight changes in 
ozone levels make a significant difference in whether or not 
they are going to attain. So the areas that we mentioned, there 
are five of them in California; there are three in Arizona, 
Wisconsin, Michigan, Indiana, Pennsylvania, and Ohio; Illinois, 
Maryland, West Virginia, and Nevada each have two of these 
areas; and they include most of the major cities in the eastern 
United States.
    Senator Barrasso. So it seems more related to the cities.
    Mr. Lewis. It is a significant concern for cities, 
particularly since many of the east coast cities are downwind 
from ozone producing areas. So even if they take significant 
efforts at home, it won't necessarily solve the problem.
    Senator Barrasso. And I think you mentioned that there are 
a number of other impacts on air, water, land quality. Could 
you expand on that a little bit?
    Mr. Lewis. Yes. In addition to the climate concerns that I 
outlined in my opening statement, we are very concerned about 
the impact on water quality. Farm runoff is a significant 
problem, particularly from corn production, and that has led to 
water pollution and degraded water habitats in streams, rivers, 
the Chesapeake Bay and the Gulf of Mexico.
    We are also concerned about habitat loss. Between 2008 and 
2012, studies have found that 7 million acres of range land, 
wetland, native prairie lands have been converted into crop 
production, and soybeans and particularly corn have accounted 
for most of the plantings on that cleared land.
    Senator Barrasso. Thank you. Thank you for your response.
    Senator Carper.
    Senator Carper. So, we were talking, like a sidebar 
conversation here, and said this really is a good panel, and 
this is an issue about which people have some real serious 
differences. But this is the kind of panel we need to help us. 
And one of the things that I always look to a panel of this 
nature on an issue that is contentious, bipartisan, but 
contentious, is to help us find a path to a smart public 
policy. And I think at the end of the day we want to make sure 
that what we are doing, if we are going to move from E10 to 
E15, the effect on the environment, what it does for customers, 
what it does in terms of reducing our demand on foreign oil. 
There are a lot of factors out here, and there are some aspects 
that would suggest that this is a good thing, and then there 
are others we have to be concerned about.
    I flagged in my statement a concern that may not be shared 
by others, but it deals with something called the Renewable 
Identification Number, RIN, and volatility in the RINs market. 
We don't have time to explain well the concern, but the concern 
is related to the volatility in the market used by refineries 
to comply with the renewable fuel standard, and it is known as 
the Renewable Identification Number, the RIN market.
    In the past 4 years or so, the RIN market had spikes, the 
RIN market goes up, it goes down, and those spikes in the RIN 
market have negatively impacted a number of refineries. We call 
them merchant refineries because they are not connected to a 
service station, gasoline stations across the Country. But I am 
interested in knowing, and maybe I will just come to you, Mr. 
Coleman.
    What impact will this bill have on RIN markets? We think 
they are too opaque. We need more certainty. We need more 
predictability. We need less volatility. Otherwise, some of 
these refineries are going to be driven out of business, and 
that would be a great tragedy.
    Please.
    Mr. Coleman. Thank you, Senator Carper. So the RIN markets 
are essentially renewable fuel standard credit markets, and the 
oil industry buys credits when it cannot put more renewable 
fuel into the marketplace. So, in other words, RIN prices go up 
when demand for those credits increases when the usability of 
renewable fuel, in this case ethanol, is restricted. What we 
are asking for is an alleviation on the restriction to use 
ethanol. It will provide a place for the ethanol to go and RIN 
prices will come down.
    The last point, of course, is that we are at 15 billion 
gallons. We are at the capped amount for corn ethanol, and we 
should see alleviation in those credit prices.
    Senator Carper. All right. Someone mentioned, I think, 
isobutanol, and we have had a real interest in biobutanol in 
the State of Delaware. DuPont has worked on this forever and 
along with, I think, BP and I think the Navy. They have a 
partnership and share views, markets and provided the products 
to markets in maybe Great Britain. I think I understood one of 
the panelists to say isobutanol does not have the problems that 
the corn ethanol has. Would you clarify that for us, isobutanol 
versus biobutanol versus corn ethanol? Again, this was with 
respect to small engines.
    Mr. Teske. Correct. Yes, that is correct, Senator. We have 
done extensive testing on isobutanol, and it has 
characteristics that are much more like gasoline, so it is much 
more like a drop-in fuel.
    Senator Carper. I understand it travels better in 
pipelines.
    Mr. Teske. Yes.
    Senator Carper. It passes better with gasoline and it has 
better energy density, I think.
    Mr. Teske. Yes, correct. So you can use existing 
infrastructure along the way, all the way from pipelines all 
the way to convenience stores. And then when you ultimately use 
it in small engines, it has the same characteristics as 
gasoline, so it performs very well in our engines.
    Senator Carper. We have been talking about this for a long 
time. In terms of market, making an impact on the markets, 
having this stuff being sold commercially in this Country, 
other countries, what is going on? Anybody. This is for 
anybody.
    Mr. Coleman?
    Mr. Coleman. Yes. Look, the way you get isobutanol is you 
basically cook the biofuel more, so you inject more energy in 
the production process, and you can actually make it look more 
like gasoline. We support the production of those fuels. To 
date, those fuels are more expensive than ethanol. Ethanol is 
the lowest cost solution. And I am a little bit confused about 
the Briggs component of this because Brazil uses two times as 
much ethanol as we do and that company sells small engines into 
Brazil, to my knowledge, without problem. So other countries 
are ahead of us. They certainly have small engines in Brazil, 
so that is one confusion that we have.
    Senator Carper. All right, my time has expired. Thank you 
so much.
    Senator Barrasso. Thank you, Senator Carper.
    Senator Inhofe.
    Senator Inhofe. Thank you, Mr. Chairman.
    I am going to do something a little bit different. I have 
questions for our witnesses, but I also have a statement I want 
to start with. I appreciate the opportunity that this hearing 
brings for us to address the wider issue of renewable fuel 
standards.
    I understand the supporters of the bill believe that the 
Reid vapor pressure issue should be a separate consideration 
from RFS, but I can't separate the two as this bill provides 
another win for ethanol at the expense of other forms of 
energy. The bill is more than a mere technical fix, more than 
mere regulatory reform. The bill would expand the waiver to E15 
and beyond.
    If we are to revisit the provision of the Clean Air Act, 
which was intentional, we must also look at the many other 
issues that have arisen since the mandate was created. Congress 
enacted the RFS in 2005 and expanded it in 2007. I opposed both 
efforts. The world of liquid fuels has changed since then and 
we produce more oil here, import less and consume less gasoline 
and emit fewer emissions from oil-based fuels. Most of the 
rationale originally justifying the RFS has disappeared. All we 
have left is an unstable program rooted in EPA waiving entire 
portions of annual requirements, allowing imported soybeans and 
ethanol from South America to count toward RFS in regularly 
missed deadlines.
    The mismanagement of the RFS has hurt every party involved. 
Oklahomans understand that the RFS is a bad deal. Our pork 
producers, our cattlemen understand that to drive feed prices 
up, Oklahoma drivers understand the ethanol blends add wear and 
tear on their engines. Oklahoma gas stations across the State 
advertise gasoline without ethanol.
    There we go. I took those myself.
    [Laughter.]
    Senator Inhofe. Unfortunately, it is going to get harder 
for Oklahomans to burn clean gas because the RFS only gets 
worse from here.
    Yet, regardless of demand and other concerns, the previous 
EPA pushed increased ethanol blends to levels that can corrode 
engines and void vehicle warranties. These are just a few of 
the reasons why I continue to oppose the RFS, which I have done 
since its creation in 2005. And because of these concerns and 
those addressed by the Chairman, I believe any discussion of a 
waiver under the Clean Air Act should not be made in a vacuum. 
I welcome the opportunity to explore these concerns.
    Now, Mr. Teske, back when I enjoyed life, I was a builder 
and developer along the coast in south Texas. Texas didn't have 
options for the small engines out there. They were surprised to 
find out in Oklahoma we don't have that problem. In fact, it is 
hard to find anything with an ethanol blend where you actually 
have the small engines in our lake areas. And I have to remind 
people sometimes that Oklahoma has more miles of freshwater 
shoreline than any of the 50 States, and we know what we are 
doing there. But down in Texas they don't have that option.
    Now, here is what I hear from the guys down there. You are 
in the engine business, so you are in a position to understand 
this. They are upset because of the effects on their 
warranties. They will go ahead and be using the blends that 
they are required to use because there is no option along the 
coast in their small engines. Then, when something happens, 
they come back against the manufacturer, that would be you, and 
have a lawsuit in many cases as a result, when in fact it was 
really just the blend that caused it.
    Is this all new to you or is this something you have been 
aware of?
    Mr. Teske. It is certainly not new to us. We warrant up to 
E10, and our engines are fine running up to E10. But the issue 
is that when there is misfueling there are opportunities for 
dealers to determine how much ethanol is in the fuel. There are 
testing kits and other things that are out there, which is why 
they oftentimes will do that test and then reject the warranty 
claim along the way. So what happens is the consumer is left 
with a damaged product.
    Senator, if I could just clarify one thing in Brazil. The 
comment was made on Brazil. Brazil has a different type of 
ethanol; it has a sugar cane based ethanol. You have to 
remember that when you are talking about performance of a small 
engine, we are talking about a tradeoff that happens between 
emissions regulations and performance. Well, down in Brazil it 
is different. So it is sugar cane based. And I can tell you we 
have a pretty good carburetor business down in Brazil because 
of the fact that they get replaced all the time.
    But to your original question, yes. This is not----
    Senator Inhofe. And I was aware of the situation down 
there. That was going to be my next question to ask you, so I 
appreciate it. But I don't want my time to completely expire.
    I have been with this issue probably longer than anyone at 
this table has, with the whole ethanol issue, and I remember 
when Al Gore invented it all.
    [Laughter.]
    Senator Inhofe. Well, I am serious about that. He did it 
with the idea that this is better for the environment and all 
that, and I think, Mr. Lewis, if I judge from your statement, 
it sounds to me like Al Gore was wrong. Do you think he was?
    Mr. Lewis. Yes, we do. We don't think much of ethanol.
    Senator Barrasso. Thank you, Senator Inhofe.
    Senator Merkley.
    Senator Merkley. Thank you, Mr. Chairman. The Ranking 
Member noted this was a good exploration of public policy, and, 
Mr. Chairman, I would just like to ask you the question are we 
holding this hearing in order to gain the diverse perspectives 
and develop better public policy in this area?
    Senator Barrasso. Well, that is the goal.
    Senator Merkley. Thank you.
    I just want to note that I think this is extremely 
valuable. We have heard that these fuels create a carbon sink, 
and we have heard that they create more global warming gases. 
We have heard they damage engines; we have heard that they 
don't damage engines. We have heard that there is no misfueling 
problem and that there is a misfueling problem.
    Just as we are having this exploration, it is incredibly 
important that we have this type of public process on any bill 
having a significant impact in America, and that is why I want 
to encourage my colleagues, all my colleagues on this 
Committee, Democratic and Republican, to insist that before a 
health care bill goes to the floor of the Senate, that it gets 
a full public hearing.
    The current plan we have heard from the Republican 
leadership is to put that bill on the floor with no hearing, 
and that would be an extraordinary violation of due process, 
would shortchange American citizens, who have every right to 
see this bill and to comment on it; it would certainly 
shortchange the legislative process, in which all 100 Senators 
should be able to see that bill, weigh in with their 
constituents, hear their constituents' responses, test the 
ideas against the testimony of experts and against the opinions 
of their colleagues; and something affecting hundred millions 
of Americans should absolutely not be considered in the Senate 
without a hearing of this type and a chance to mark up the 
bill.
    I hope my colleagues of both parties will agree and fight 
for that principle of legislative deliberation.
    Now I want to turn to my first question to Mr. Coleman.
    You referred to the fact that often you can create a 
biofuel that is a carbon sink, in which case it means it 
captures more carbon dioxide than it emits. Can you expand on 
that? Why is there such a big contrast between that point of 
view and the point of view expressed by another individual on 
the panel that says you are going to increase global warming 
gases?
    Mr. Coleman. So, to clarify the witness to my left, 
Jonathan, he is making that claim about corn ethanol, and I 
will talk about that in a minute.
    The carbon sink fuel cellulosic ethanol, the cellulosic 
ethanol that is coming out of the first round of commercial 
biorefineries, as I said, is anywhere from 85 to sort of 126 
percent better than gasoline. What that essentially means is 
that in the process of making the fuel, as it absorbs CO2 and 
sunlight, there is more CO2 and energy going in from a carbon 
perspective than is emitted when that fuel is burned. And this 
is an independently certified pathway, and it is pretty 
extraordinary because a lot of the fuels that are regarded to 
be the most innovative, like electric drive, hydrogen fuel 
cells, etcetera, do not approach this level of carbon 
reductions. And if we are concerned about climate change, there 
is an opportunity with these high-end fuels to actually pull 
down on our carbon inventories.
    On the corn ethanol side, and I don't represent that 
industry, I have to say that notwithstanding the fact that 
Jonathan and I are from the same town in Boston, we don't agree 
on this. If you look at the agencies that actually say corn 
ethanol is reductive, they include USDA, EPA, notwithstanding 
his statement, Department of Energy.
    Sixty-five percent of the credits under the low carbon fuel 
standard in California are actually produced by the corn 
ethanol industry, and what the organization did was they 
cherry-picked data out of EPA data and changed the system 
boundary around what EPA did on corn ethanol to come up with 
their conclusion. And that is not the conclusion, by the way, 
that EPA actually had, which is that corn ethanol reduces 
carbon emissions.
    Senator Merkley. And you are speaking lifecycle to 
lifecycle?
    Mr. Coleman. Inclusive of indirect land use change, yes.
    Senator Merkley. And, Mr. Lewis, you came to a different 
conclusion. If you could just, in one or two sentences, what is 
the huge difference here in your calculations?
    Mr. Lewis. The difference is that the analysis that EPA 
published, the analysis that Brooke is referring to, looks at a 
future hypothetical production scenario that begins in 2022 and 
assumes production technologies that have not been adopted by 
the industry. The analysis that we are looking at, that EPA 
also did, looked at current production technologies and found 
that there was a higher GHG emissions than from gasoline.
    Senator Merkley. Mr. Coleman, you are shaking your head. 
What is the difference?
    Mr. Coleman. I am shaking my head because in order for EPA 
to measure the carbon impact of biofuels, they had to go out 
into the future, because they wanted to do land use change. And 
to check land use change, you have to shock a model out into 
the future with a high level of biofuels. What EPA then said 
was, if we are going to go out into the future system boundary-
wise, we are going to credit biorefining efficiency that we see 
every single year out into the future. It is either the future 
or the present.
    What this organization did was they went out into the 
future on land use change and went to the present on 
biorefinery. So they picked the negatives out of the future and 
then picked the negatives out of the present, put them together 
and said, well, that is not as good. That is why there are 
system boundaries when you do scientific analysis, and that is 
a distorted outcome.
    Senator Merkley. Thank you both.
    Senator Barrasso. Senator Fischer.
    Senator Fischer. Thank you, Mr. Chairman.
    As a cattle rancher, I just can't let my dear friend, 
Senator Inhofe's, comments pass without me weighing in on what 
ranchers think about ethanol and ethanol plants and byproducts. 
As a cattle rancher, we have mother cows on our ranch. We live 
in the Nebraska Sand Hills, and we use, as our neighbors use, 
the byproducts from ethanol plants. We are also very fortunate 
in Nebraska, we bypass Texas, to my dear friends from Texas, 
with Cattle on Feed, and we do so because of those byproducts 
from ethanol plants. So there is a direct benefit to cattle 
ranchers, people in the livestock industry, and I wanted to 
point that out.
    Before I begin my line of questioning, I would also like to 
bring to the Committee's attention two surveys that were 
conducted by Quadrant Strategies that illustrate consumers' 
knowledge and confidence about the different types of gasoline 
available to purchase. The first survey found that 96 percent 
of motorcyclists say it is easy to figure out the type of 
gasoline to put in their engines. The second survey found that 
94 percent of boat owners are confident that they know the 
right gasoline to use in their boats. And I too put my faith in 
consumers who can pick out the right kind of gasoline to put in 
their engines.
    Mr. Chairman, I would ask unanimous consent to place these 
two surveys into the record.
    Senator Barrasso. Without objection. I would note also that 
about 89 percent of all drivers consider themselves in the best 
one-third of all drivers.
    [Laughter.]
    Senator Fischer. There again, Mr. Chairman, I am sure that 
Nebraska rated higher.
    [Laughter.]
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    Senator Fischer. Mr. Lorenz, I would like to thank you for 
being here today. In your testimony you discussed how this bill 
would alleviate what I think you and I both agree is kind of 
nonsensical regulatory barriers that prevent consumers from 
choosing the fuel that they want to use in their vehicles 
during the summer months. Can you please explain to me the 
process your stores must undertake to comply with this barrier 
during the current summer fueling season?
    Mr. Lorenz. Absolutely, Senator. So we currently have, as I 
mentioned, 190 stores, and that has continued to grow, with an 
average of five dispensers per store. So before June 1st this 
year we had to replace almost 2,000 stickers or labels on all 
those dispensers; five dispensers, 190 stores, both sides.
    Senator Fischer. And do you believe that the current 
treatment of E15 limits consumer choice?
    Mr. Lorenz. Absolutely. Here you have a product that is 
perfectly fine for eight and a half months out of the year, but 
for an antiquated regulation you can't sell it for three and a 
half months out of the year. I know of no other product on the 
market that falls into that category.
    Senator Fischer. I thank you for your support of the bill 
and for consumer choice. So thank you.
    I assume that you talk to other E15 retailers around the 
Country on a fairly regular basis. Do they share your views 
with this regulatory issue?
    Mr. Lorenz. Oh, absolutely. All the same.
    Senator Fischer. And we hear a lot in this debate on the 
impact this would have on small engines, off-road engines. Can 
you tell me what percentage of fuel sold nationwide goes into 
these engines?
    Mr. Lorenz. I know the combination between small engines, 
boats, and motorcycles is about 3 percent. Well, let's say E0 
would be 3 percent.
    But I think just to add, if I may, Senator, our customers 
consist of homeowners, motorcyclists, boat owners, and we have 
no incidents, having sold this product for almost 2 years, we 
have no problems with misfueling. To your point about the 
surveys, people know what to put in their boat, car, small 
engine, motorcycle.
    Senator Fischer. As followup, do you believe consumers can 
continue to correctly choose the right fuel for their engines?
    Mr. Lorenz. Absolutely. You know, for eight and a half 
months out of the year, again, we assume they can, and now for 
this reason we are saying for three and a half months out of 
the year there is this concern that they are not going to be 
able to select the right choice. So it doesn't make any sense 
to me.
    Senator Fischer. I agree with you.
    Are you concerned about any liability on misfueling?
    Mr. Lorenz. We guaranty all the gas that we sell, so if 
there was a problem caused by the fuel that we sold you, we are 
going to make it right and fix it.
    Senator Fischer Good. Thank you, sir.
    Thank you, Mr. Chairman.
    Senator Barrasso. Thank you very much for your questions.
    It seems that there were a number of Democrats who were 
here, and none of them are back right now, Senator Carper, so 
with that I am going to head back to the Republican side for 
questions and turn to Senator Rounds.
    Senator Rounds. Thank you, Mr. Chairman. Just a couple of 
thoughts.
    Mr. Lorenz, the corn ethanol industry in South Dakota has a 
huge amount of support within our population.
    Before I go on, I guess I would like to submit to the 
record a letter of support for S. 517 from the South Dakota 
Corn Growers.
    Senator Barrasso. Without objection.
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    Senator Rounds. Thank you, Mr. Chairman.
    The corn ethanol industry in South Dakota employs literally 
tens of thousands of South Dakotans, and it really is a pillar 
of our State's economy. We have the capability of producing 
nearly a billion gallons of this product per year. As the 
market for ethanol increases, the market for corn will grow, 
and that means more jobs and increased revenue for corn 
farmers, many of whom work on their own family owned farms.
    There is a byproduct, the dry distillers grain and the wet 
distillers grain, which I think you find in the upper Midwest 
we all recognize as being a very high quality food product for 
livestock. We call it, in some cases, Dakota gold, and we 
market it not only in South Dakota, but to dairy farmers 
throughout the Country. California even brings it in, so it is 
a high quality product. And the more ethanol we produce, the 
more of the byproducts we also have available as well. So it 
isn't necessarily a matter of losing food production to the 
production of alcohol.
    I am just curious, Mr. Lorenz, when you look at this 
particular legislation that is in front of us, where we go from 
10 to 15, don't you think that what we are really doing is just 
taking out a whole lot of red tape so we can sell basically the 
same or very similar product throughout the year?
    Mr. Lorenz. Absolutely. Like I have said before, we have 
the ability to sell this product for eight and a half months 
out of the year, and it is purely, in our view, a technicality 
and an antiquated regulation that doesn't allow us to sell it 
during the summertime.
    Senator Rounds. Between E10 or 10 percent blend of an 
ethanol with gasoline versus a 15 percent blend, would there be 
a change in price? Would you expect a change in price?
    Mr. Lorenz. We currently offer E15, so I just want to make 
it clear that in all the stores that we have E15, we also sell 
E10. So you have a choice, and this is what it is all about for 
us, is giving the consumer a choice. So we typically sell that 
from 3 to 5 cents a gallon, currently 5 cents a gallon less 
than 87. So it is not only more affordable; it is higher octane 
and cleaner burning, which appeals to the consumer.
    Senator Rounds. And I think that is important to point out. 
I think it is fair to say that most people, I think, would 
assume that if you have a higher octane fuel, you have a better 
fuel. Would that be fair to say as not only a belief, but 
perhaps found in fact?
    Mr. Lorenz. The consumer equates higher octane with better 
performance, which is true. And they also equate that with 
higher price. The thing about E15 is it is actually breaking 
down the consumer's paradigm on fuel on two levels, because you 
have a fuel that is not only cheaper, but also cleaner burning. 
And typically a consumer would expect to pay more for a fuel 
that is higher octane and more environmentally friendly, and 
that is not the case with E15.
    Senator Rounds. Ms. Yanowitz, I am just curious. The last 
statement in your testimony you say, ``Data indicates that 
replacing E10 with an E15 of the same vapor pressure will cause 
a slight decrease in emissions of ozone-forming organic 
compounds and carbon monoxide.'' Can you elaborate on that 
statement?
    And I would just like you to answer one other question for 
me as well, and that is I am really curious, I always thought 
that alcohol was alcohol and, by definition, would have a 
similar formula. Can you share any thoughts? And I know that 
Mr. Teske had suggested the change in ethanol from a sugar cane 
base versus a corn base. Is there actually differences in terms 
of the chemical compounds between the two of them?
    Ms. Yanowitz. You are quite right, ethanol is ethanol 
wherever it is, but in Brazil they use some hydrous ethanol 
that has water in it, and there could be differences in 
emissions, for example,
    Senator Rounds. OK. When we talk about the value, the 
ability to determine octane, and for this, Brooke, if you 
wouldn't mind, I like a higher octane in my vehicles, and I try 
to buy it. I buy E20 and E30. I have a flex fuel vehicle that 
is set up to do that, and I will buy E20 and E30 fuel blends, 
and part of what I like about it is the fact that I can get a 
higher octane rating, which I have always assumed was a better 
product, and it costs me less money as a consumer.
    I am just curious. Long-term, when we get to the CAFE 
standards coming in in the year 2025, in that neighborhood, 
isn't it going to be a valuable item to be able to have a 
resource such as an alcohol product, regardless of where it is 
made, to be able to increase the actual octane ratings at a 
lower price than what it would be if we had a different type of 
a product, another chemical than we would have to put in to the 
existing petroleum products to bring that octane rating up? And 
aren't we really moving toward advanced fuels when we add 
something that feeds into that octane rating?
    Mr. Coleman. We are. So modern vehicles, and I think the 
autos have to make their own decisions about which way they are 
going to go over the next not just 5 years, but 10, 20 years. 
But you can tune a modern engine to take advantage of the 
higher octane and ethanol, and create much greater efficiencies 
as long as that octane is there and as long as it is clean 
enough to comply with the Clean Air Act; and the only solution 
in that lane is ethanol and alcohol. So where we want to go is 
to give, as Mike said, consumers a choice at the pump. But 
imagine a scenario where the higher ethanol blends are actually 
cheaper, higher octane and create efficiencies from an internal 
combustion engine that really get to where everybody wants to 
go.
    Senator Rounds. Thank you.
    Thank you, Mr. Chairman.
    Senator Barrasso. Thank you, Senator Rounds.
    Senator Ernst.
    Senator Ernst. Thank you, Mr. Chairman. And thanks to all 
of the witnesses here today. This really, truly, Chairman, is 
one of the most exciting panels that I have seen so far. This 
is really great and a wonderful topic for the folks in the 
Midwest that actually do grow corn. I want to echo sentiments 
about the DDGs, the distillers grains that are used as 
feedstock. Those that know ethanol production know that very 
little is wasted from that original kernel of corn when it 
enters into that plant; it is all used for the benefit of our 
livestock and our growers.
    So removing this unnecessary impediment for retailers and 
consumers alike is a crucial step toward expanded acceptance of 
biofuels nationwide and will help pave the way for advanced 
biofuels. I would like to enter for the record two letters from 
different groups expressing their support for this legislation, 
along with a survey conducted earlier this month of small 
engine machine owners.
    Senator Barrasso. Without objection.
    Senator Ernst. OK. Thank you, Mr. Chair. I appreciate it.
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    Senator Ernst. And it has been an interesting discussion 
because a lot of what I have heard today is talking about 
misfueling.
    Mr. Lorenz, you brought up a great point: most folks know 
what product to use. I am a motorcyclist. I know exactly what I 
can put into my motorcycle and what I can't.
    Mr. Teske, you had mentioned misfueling with small engines. 
Does Briggs & Stratton offer a two cycle oil-gasoline small 
engine?
    Mr. Teske. We do not.
    Senator Ernst. You do not.
    Mr. Teske. We do not.
    Senator Ernst. OK. Do you know of other manufacturers that 
might?
    Mr. Teske. Yes.
    Senator Ernst. And do you think those consumers can 
adequately blend that oil and fuel together to properly run 
their small engines?
    Mr. Teske. Yes. But manufacturers have also taken to doing 
it for them. So there are opportunities where, because there 
have been failures. I know of lots of failures where people had 
not properly blended, and ultimately there has been a market 
now for premixed fuel along the way, too, and that market 
wouldn't exist if everyone knew how to blend.
    Senator Ernst. Do you think that there are consumers at the 
gas pump or pulling into a station that might fuel their 
vehicles with diesel when those engines aren't diesel engines?
    Mr. Teske. I don't believe so, no. Not that I am aware of.
    Senator Ernst. You don't believe so. But we heard other 
testimony where there is lots of misfueling out there; even if 
there are barriers provided, other people will try and fuel 
their cars with the wrong products. To me, that is not trusting 
the consumer to know their products and what to use in their 
own vehicles. I think there is a level of trust.
    Mr. Lorenz, you said you don't see those misfuels. Is that 
correct?
    Mr. Lorenz. That is absolutely correct. We just, like I 
said, 2 years selling E15 and we have had no incidents of 
misfueling.
    Senator Ernst. OK.
    Mr. Lorenz. Or problems with vehicles.
    Senator Ernst. Mr. Teske?
    Mr. Teske. Senator, if I may. It is generally not the 
convenience store owner that is going to hear about it; it is 
going to be us, and specifically through retailers. So we have 
talked to a number of our retailers. Fuel-related issues are 
becoming more prevalent.
    Senator Ernst. I would say----
    Mr. Teske. Up to 40 percent of the returns at a major 
retailer has to do with fuel-related type issues, and it is 
just very frustrating because they have identified that a lot 
of it has to do with ethanol. They put out a promotional 
campaign that said ditch the ethanol, which we are not 
advocating to ditch the ethanol.
    Senator Ernst. Certainly, I hope you don't.
    Mr. Teske. But they did, and ultimately were threatened by 
a number of different constituents because ultimately ethanol 
is a problem in small engines. So we warrant up to E10----
    Senator Ernst. OK. And I understand. I use small engines. I 
am a motorcyclist, so I do understand, and I hope that most 
consumers understand the products that they use. But there is 
an argument here that consumers don't understand what product 
is right for their small engines, or even for their vehicles, 
and I think that is a bad argument; that we should discontinue 
the use of a product simply because consumers don't know what 
is the recommended product for their own particular engine. So 
I think we need to trust our consumers.
    I would like to go back to Mr. Lorenz. You have E15 
products that are offered at your convenience stores. What were 
the barriers to entry for selling that E15?
    Mr. Lorenz. Actually, one of the barriers was this very 
issue. This was a concern of ours. We still made the business 
decision to go ahead because we thought that this product was 
compelling enough of a value proposition to the consumer. This, 
though, is a severe barrier to actually offering this; worse 
than actually what we expected. Because we knew this was going 
to be a problem going in, but what we found is it has really 
tended to undermine the integrity of the product during the 
summertime, because relabeling, the consumer really doesn't 
know what is going on. That doesn't happen with any other fuel, 
and it is extremely detrimental.
    Senator Ernst. Again, I think if it is an OK product to 
sell any other time during the year, and limiting that 
opportunity during the summer, again, goes back to availability 
of product that is approved for sale, but also trusting the 
consumer and the consumer knowing what is the right product or 
the best product for them to choose. I think that is somewhat 
of the underlying issue that we are seeing today.
    So I do thank you.
    I am out of time, but I want to thank you, Mr. Chair. This 
has been a great discussion.
    Senator Barrasso. Thank you, Senator Ernst.
    Senator Duckworth.
    Senator Duckworth. Thank you, Mr. Chairman, and also the 
Ranking Member for convening this very important conversation.
    I am a proud cosponsor of the bipartisan Consumer and Fuel 
Retailer Choice Act because it will solve this regulatory 
burden without weakening the Clean Air Act.
    My bottom line is simple: the renewable fuel standard is a 
win-win. It creates good jobs in Illinois, across the Midwest, 
all around the Country, and it helps to cut our Nation's 
dangerous dependence on foreign oil and reducing greenhouse gas 
emissions.
    Mr. Coleman, many of us support the RFS because it is 
spurring growth in advanced biofuels. Can you share with us how 
adopting the waiver that exists for E10 fuels and applying it 
to E15 will help the advanced biofuels industry grow and create 
good paying jobs?
    Mr. Coleman. Yes. Thank you, Senator Duckworth. I talked a 
little bit about this, but I would be happy to expand on it.
    Senator Duckworth. Please.
    Mr. Coleman. Again, the investment in our industry, we are 
at the point now where we have developed the technology at 
pilot scale; we have developed the technology at demo scale; 
and at this point we need money to build plants. And for a very 
long period nobody was lending money of any type over the great 
recession five, 6 years ago, or longer. We are now at a point 
where the economy is healthier, but the conversations we are 
having with investors are will there be demand; is there 
headspace in the marketplace? And this will fundamentally 
change that conversation because together with the renewable 
fuel standard, which provides a greater incentive at this point 
for cellulosic ethanol, which is good news, actually, for corn 
ethanol production because it is feedstock diversification, 
that will change the conversation. We will have the ability to 
unlock a lot of project finance, which means new refineries, 
new bolt-on lower carbon; and basically you will have an 
ethanol industry that gets to the next level from an innovation 
standpoint.
    Senator Duckworth. How much conventional gasoline could we 
potentially replace once you get to that point?
    Mr. Coleman. Well, the upside for cellulosic ethanol alone, 
according to NREL and some other reports, is tens of billions 
of gallons from agricultural waste alone, without disrupting 
food and feed markets. So that is obviously a study, so that is 
a ceiling analysis. But if this technology were to 
commercialize in scale in a similar way that corn ethanol did, 
which is very quickly, we are talking about billions of gallons 
of displacement of foreign oil working together with other 
technologies to get energy independent.
    Senator Duckworth. Thank you.
    Dr. Yanowitz, I understand that you have worked extensively 
with the master renewable energy laboratory and studied the 
impact of ethanol on vapor pressure specifically. I am 
wondering if you could characterize your opinion on the 
environmental impacts of ethanol more broadly. Can you share 
your thoughts, for example, of ethanol's impact on greenhouse 
gas emissions?
    Ms. Yanowitz. I am really a one-trick pony.
    [Laughter.]
    Ms. Yanowitz. I can't speak to greenhouse gases. I can tell 
you about ozone. I don't expect there will be any impact on 
ozone. I expect it will reduce PM emissions. I expect it will 
be a benefit to air quality, as opposed to greenhouse gas 
emissions.
    Senator Duckworth. Wonderful. Thank you.
    Mr. Chairman, I would like to request unanimous consent to 
submit three letters into the record that support the passing 
of S. 517, a letter from the Renewable Fuel Association, a 
letter from 28 members of the advanced and cellulosic industry, 
and also a letter from the National Corn Growers Association.
    Senator Barrasso. Without objection.
    Senator Duckworth. Thank you.
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    Senator Duckworth. I would also like to submit an analysis 
of greenhouse gas benefits associated with this bill.
    Senator Barrasso. Without objection.
    Senator Duckworth. Thank you.
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    Senator Duckworth. Mr. Lorenz, you indicated in your 
testimony that Sheetz sells E15 because there is a consumer 
demand for the fuel, not because of any required mandate. If 
true, this means that consumers are losing money because E15 is 
often less expensive than alternative fuels, and gas stations 
are spending more to comply with labeling burdens that deliver 
little value to consumers during those summer months.
    Is this assessment correct, and can you share how this 
labeling conundrum is challenging the market?
    Mr. Lorenz. Well, I mean, I think it is preventing current 
retailers from entering into the market and offering E15. It is 
also affecting retailers that are offering E15 today and the 
fact that it is difficult to actually grow sales, because we 
have seen where sales have been growing, then the summer comes 
along and we have to relabel all of our dispensers, and the 
sales don't return or the customers don't return after the 
summer. And I think it has to do with they are just confused as 
to what the product is because, like I said, there is no other 
product or no other gasoline fuel that we have to relabel. So 
they don't know anything about our VP or waivers or anything 
like that. We actually created a brochure to explain that, but 
they don't really care. I mean, the consumer just wants to buy 
their gas and go; they don't want a lesson on gasoline 101 or 
renewable fuel standards, or anything else.
    Senator Duckworth. So this is a burden, especially on those 
gas station owners who are small businessmen who are trying to 
just retain their market share and provide a service.
    Mr. Lorenz. Oh, absolutely. I mean, I think that we look at 
it from the standpoint that this is an advantage, that we are 
offering a new product, giving that consumer choice of a 
product that is cleaner burning, cheaper; and that is what they 
want. If you look at the consumer, as a retailer, we speak for 
the consumer. And what they want, the gasoline product is 
highly price-sensitive. They want something that is cheaper and 
higher performance, and that is what E15 gives you.
    Senator Duckworth. Thank you.
    I yield back, Mr. Chairman.
    Senator Barrasso. Thank you, Senator Duckworth.
    Senator Boozman.
    Senator Boozman. Thank you, Mr. Chairman.
    Mr. Teske, I think you gave the statistic that 40 percent 
of the warranty was fuel-related.
    Mr. Teske. Up to 40 percent of the returns to one of the 
major retailers that we deal a lot with has to do with fuel-
related issues.
    Senator Boozman. I have heard that also from the retailers. 
Also, when you visit with the mechanics, the mom-and-pop shops 
that services equipment, the reality is I think they would say 
the same thing; maybe even more so. So we do have a problem in 
that regard when you look at the return rate, when you look at 
the people that are actually dealing with the products, so it 
is something that we have to deal with. You mentioned in your 
testimony, I believe, you referenced the transition from leaded 
to unleaded gasoline in the 1970's and 1980's, and during this 
period new fuel tanks were designed to ensure consumers were 
not at risk of misfueling. Can you explain why this is 
preferable to labeling?
    Mr. Teske. Having a physical barrier will prevent someone 
from misfueling. So the whole idea was, back then, is that if 
there is a physical barrier, you really can't do it. Now, 
people were trying to circumvent that, but you had to be 
mindful of what you were doing.
    So we don't have that same luxury here. This has to do with 
a label on a pump, a pump that can be really confusing. And 
Senator Ernst said we should trust consumers. Consumers are 
also economic animals, and they believe, and we have studies, 
as well, that show they basically trust the convenience store 
not to sell them something that won't work in their product.
    So think about a convenience store today. You will have 
separate pumps for diesel. You will have separate pumps for 
E85. In my neighborhood, we now have 88, they are calling it 
unleaded 88, which is E15. It is within the same pump 
configuration as what has always been there and, in fact, it is 
cheaper. So what they will oftentimes do is they will migrate 
to that cheapest product that is out there because they want to 
save money. I don't blame them for wanting to save money, but 
they will have more cost in the long-term because ultimately 
that engine is going to fail.
    So, ultimately, we don't think a label is going to make a 
difference. We think that it is useful, but it is not going to 
prevent misfueling from occurring.
    Senator Boozman. So in the case of diesel, you simply can't 
stick it in your--I think probably most of us, certainly I have 
tried to do that, when I am daydreaming or whatever. That is 
just something that most of the audience, I think, has 
experienced also.
    Mr. Coleman, you mentioned cellulosic ethanol. Corn ethanol 
was supposed to be the bridge as we got into cellulosic 
ethanol, which makes a lot of sense. Tell me about its 
progress. This is something we have heard about for a decade 
now, over a decade, that it was going to be and do, and we are 
all looking forward to that, but tell me what the sticking 
points are, why are not there yet, and really foresee into the 
future, be a futurist for me and tell me what the difference is 
that is going to be a few years from now or 10 years from now 
as we make that transition.
    Mr. Coleman. Sure. Thank you, Senator, for the question. So 
essentially cellulosic ethanol became part of national energy 
policy in 2007 with RFS-2. The rules were completed by EPA in 
2010 and, as you know, by then we were mired in a global 
recession where we couldn't get any lent money, essentially, to 
build. So there was a delay. President Obama----
    Senator Boozman. But it really went back even before that, 
in the sense of the----
    Mr. Coleman. Well, as I had mentioned earlier in my 
testimony, doing the stuff in the lab and actually convincing 
the oil industry to buy it are two different things, and the 
RFS-2 was really the first time that we had a law that would 
require the oil industry to buy it in a non-competitive 
marketplace. The good news is it is no longer a future issue. 
As Senator Ernst knows and Senator Fischer knows, we now have 
enzyme facilities up and running, cellulosic ethanol commercial 
facilities up and running, three of them in Iowa. So what you 
will see over the next couple years is what we----
    Senator Boozman. So it is cost-effective now?
    Mr. Coleman. It is cost-effective. You have to remember 
that ethanol replaces some of the most expensive components of 
gasoline. It is an octane enhancer. And I am sure Mike or 
others could expand on this. But we are not replacing 
conventional gasoline; we are replacing benzene, alkylates. And 
some of these things are $5.00 a gallon, which is why you are 
seeing savings. So we will see commercial learning curve 
achievements over the next four or 5 years if we can get 
demand, and that is why this bill is so important.
    Senator Boozman. OK.
    Thank you, Mr. Chairman.
    Senator Barrasso. Thank you, Senator Boozman.
    Senator Markey.
    Senator Markey. Thank you, Mr. Chairman, very much.
    Mr. Coleman, in Massachusetts and in many other States 
across the Country we use reformulated gasoline that is 
designed to burn more cleanly and reduce smog forming and toxic 
pollutants. Could you comment on the impact of this bill on 
reformulated gasoline areas like Massachusetts?
    Mr. Coleman. Appreciate the question, Senator Markey. This 
does not affect RFG zones at all. Ethanol waivers are not 
allowed in RFG zones. Essentially, the oil industry produces 
sub-vapor pressure-based gasoline, so this is really a 
conventional gasoline law.
    Senator Markey. In order to create a higher octane fuel 
that allows engines to run more efficiently, petroleum refiners 
add benzene-based aromatic hydrocarbons known as BTEX. But 
there is a major problem with BTEX, and its combustion 
byproducts are carcinogenic and neurotoxic and a major source 
of toxins in urban areas. Maybe instead of BTEX it should have 
been BTOX they are called.
    The good news is that ethanol is an even better octane 
booster than BTEX, and it is cheaper, as well.
    Could increasing usage of E15 reduce America's exposure to 
BTEX?
    Mr. Coleman. Yes. In order to comply with the Clean Air 
Act, you can't have too much octane or too much of these 
components, so when you add more ethanol, by definition you 
have to take some stuff out of the blend to make sure that it 
complies with fuel specs. So what comes out is the most toxic 
and often expensive octane enhancers, as you describe, and 
replacing them with something that is renewable and American 
made.
    Senator Markey. Dr. Yanowitz, could you discuss some of the 
dangers to human health associated with BTEX, benzene, toluene, 
xylene?
    Ms. Yanowitz. I am certainly not an expert on, again, this 
topic, but benzene is a well known carcinogen, and removing any 
petroleum from the mix will reduce the amount of this 
carcinogen in the air.
    Senator Markey. And in your expert opinion, would it be 
possible for refiners to replace the BTEX in gasoline with 
ethanol and deliver consumers a high octane premium gasoline 
that costs the same as regular?
    Ms. Yanowitz. They can certainly remove some of the benzene 
by replacing it with ethanol.
    Senator Markey. Mr. Lewis, have you looked at the impact of 
air toxics from BTEX in gasoline, and is the Clean Air Task 
Force concerned about these pollutants?
    Mr. Lewis. We are concerned about those pollutants.
    Senator Markey. You are concerned?
    Mr. Lewis. Certainly.
    Senator Markey. What is the concern?
    Mr. Lewis. With respect to BTEX?
    Senator Markey. Yes.
    Mr. Lewis. We are concerned about the carcinogen effects of 
BTEX. We are also concerned about the toxic impacts of 
aldehydes. And there is mixed impacts from ethanol on both 
fronts.
    Senator Markey. Mr. Coleman, in your testimony you note 
that all types of ethanol have lower lifecycle carbon emissions 
than gasoline, even after accounting for changes in land use. 
Is this because more and more of the oil we are extracting 
today is coming from hard-to-reach sources like deep ocean 
drilling, shale, and tar sands?
    Mr. Coleman. That is part of it. You know, essentially we 
know more now than we did 10 years ago, and the more recent 
analysis reflects efficiencies on the biorefining side for all 
fuels. It also reflects more knowledge on land use. But you 
make a good point. These fuels should not be analyzed in a 
vacuum. So if you take ethanol out or add it back in, you are 
either replacing it or displacing something, and that something 
is not average petroleum. There is no big tank in the middle of 
the Country where it is all mixed together. What is actually 
being replaced is marginal petroleum. The era of light sweet 
crude is over and, as you can see, the oil companies are 
looking in deepwater, fracked oil, heavy oil from Venezuela, 
and we are displacing the marginal gallon of oil, which is 
significantly more carbon intensive, and that is particularly 
the case with regard to tar sands.
    Senator Markey. And I know that some of the other Senators 
have already asked questions on the share of this growing 
advanced biofuel industry and the impact on climate change. 
Since that has already been covered, I won't go over that same 
territory.
    I was the chairman of the Select Committee on Energy 
Independence and Global Warming back in 2007, when we created 
that new law with regard to cellulosic, and in the law it said 
that by 2022 our national goal was 16 billion gallons of 
cellulosic biofuels. And, of course, that was December 2007 
when that law was signed into law by George Bush. 2008, the 
biggest recession since the Great Depression. 2009 it 
continued. The capital markets were very skittish about the 
investment that would have to be made, so it was an unfortunate 
worst case scenario for the cellulosic industry in terms of 
getting off the ground to meet these goals. And the goals have 
been lowered, but it still offers tremendous promise for the 
future and it is starting to really pick up some momentum right 
now. So that is our great hope.
    Thank you, Mr. Chairman.
    Senator Barrasso. Thank you very much.
    Senator Carper.
    Senator Carper. Thanks very much.
    When I got out of the Navy near the end of the Vietnam War, 
I moved from California to Delaware to get an MBA, and I 
remember one of the courses I took was marketing. And the 
professor brought into our class 1 day not a glass, but he 
brought in a container from margarine, and he said what do I 
have here? And we said, well, that is a container for 
margarine. And he said, people buy this for different reasons. 
He said some people buy this margarine because of the price. 
Some other people buy margarine because of the taste. Some of 
them buy the margarine because of its, I don't know, its health 
benefits for them, or lack thereof. He said some people buy the 
margarine because this container is recyclable. Some people buy 
it because they like the way it looks and they want to use it 
for storing things. But he said people buy it for a lot of 
different reasons.
    And sitting here I was reminded today of a little bit of 
that. People buy ethanol for fuel for their vehicles for 
different reasons. Some people think it is good for the 
environment. There is reason to believe maybe that is true. 
Others think that is not the case. Some folks buy it because 
they think there is better value, lower cost, and we actually 
have higher performance because of the octane. Some people buy 
it because they like the idea that we want to reduce our 
reliance on foreign oil.
    I have a concern. I will go to Todd and the concern that he 
has raised about the impact on their business and their 
customers and so forth. I think we have to follow the Golden 
Rule, put ourselves in their shoes; how would we wanted to be 
treated here. I think that is important for us to keep in mind.
    For me, a real consideration of this legislation deals with 
the RIN market and trying to decrease volatility in the RIN 
market. There is a saying, you have heard it: All politics is 
local. One of Ed Markey's great mentors, Tip O'Neill, used to 
say that, so a half dozen or so refineries, mostly on the east 
coast, for which this spiking up and down, volatility in the 
RIN market, is threatening to put them out of business. And we 
are anxious to see if there is some way to address, either in 
this legislation or other legislation, the way to reduce the 
volatility in the RIN market.
    Could you just explain, Mr. Coleman, for us or describe how 
many more RINs, just roughly how many more RINs we are talking 
about that might become available if a bill like this were to 
become law and what more could we do to make the RIN market 
more transparent?
    Mr. Coleman. Well, my view on this, although there are 
different kinds of RINs and, as you know, we have gotten to the 
point where the conventional biofuel RIN, which is 
predominantly corn ethanol, which is the one of concern for 
refineries, we are no longer increasing the requirement for 
that RIN. So pressure is going to come off of that RIN. Now, it 
takes a little while for that fuel to flow out, but the more 
that fuel does flow out, the less pressure there will be on 
credit markets. Where this will really generate results is the 
production of D3 cellulosic RINs because suddenly you are 
changing the discussion.
    So I guess I would summarize a relatively complicated issue 
by saying the degree to which we facilitate a shift to using 
more renewable fuel and ethanol, it pushes the market away from 
putting pressure on RIN markets, which is what creates that 
volatility more toward usability of the fuel, which takes 
pressure off those RIN markets. And it also moves it toward D3 
RINs and away from the RINs that have been an issue for your 
refineries.
    Senator Carper. All right, thanks.
    Mr. Chairman, I said at the beginning this is a good panel, 
and it is one if I wanted to find some consensus on this issue, 
this is probably a good place to start. I think I have some 
reservations about the legislation that is before us. I know 
others do as well. But for me, in deciding where to go, one of 
the issues we have to address as part of it is the one I have 
raised here today.
    Thank you all for coming. Thank you for your thoughtful 
testimoneys. We are just very grateful to you. Thank you.
    Senator Barrasso. Thank you, Senator Carper.
    Mr. Lewis, anything you would like to add? You have been 
sitting here mostly quietly for a little while.
    Mr. Lewis. Thank you. I would like to respond to the point 
that Mr. Coleman made that we cherry-pick data. I just want to 
point out that the National Research Council took the same 
exact approach that we did in determining whether or not EPA's 
greenhouse gas emissions analysis for corn ethanol was 
accurate.
    And I would just like to leave off by saying there are 
important unanswered questions about the extent to which 
expanded use of E15 will impact corn ethanol production levels 
and ozone formation, and we think that those questions should 
be studied and answered before any further consideration of 
this bill occurs.
    Thank you.
    Senator Barrasso. Well, thank you.
    I want to thank all of you. I thought it was a very 
productive discussion. We obviously had a lot of people here 
attending the hearing and a very busy day here on Capitol Hill. 
Members are going to be able to submit questions for the 
record. The hearing record is going to stay open for 2 weeks, 
so please, if you get written questions, respond quickly.
    I want to thank all of the witnesses for your testimony 
today.
    Thank you, Senator Carper.
    The hearing is adjourned.
    [Whereupon, at 11:50 a.m. the committee was adjourned.]

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