[Senate Hearing 117-246]
[From the U.S. Government Publishing Office]


                                                    S. Hrg. 117-246

                 THE ENVIRONMENTAL PROTECTION AGENCY'S
                    RENEWABLE FUEL STANDARD PROGRAM:
                      CHALLENGES AND OPPORTUNITIES

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

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS

                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

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                           FEBRUARY 16, 2022

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  Printed for the use of the Committee on Environment and Public Works
  
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        Available via the World Wide Web: http://www.govinfo.gov
        
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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                  THOMAS R. CARPER, Delaware, Chairman
                  
BENJAMIN L. CARDIN, Maryland         SHELLEY MOORE CAPITO, West 
BERNARD SANDERS, Vermont                 Virginia, 
SHELDON WHITEHOUSE, Rhode Island         Ranking Member
JEFF MERKLEY, Oregon                 JAMES M. INHOFE, Oklahoma
EDWARD J. MARKEY, Massachusetts      KEVIN CRAMER, North Dakota
TAMMY DUCKWORTH, Illinois            CYNTHIA M. LUMMIS, Wyoming
DEBBIE STABENOW, Michigan            RICHARD SHELBY, Alabama
MARK KELLY, Arizona                  JOHN BOOZMAN, Arkansas
ALEX PADILLA, California             ROGER WICKER, Mississippi
                                     DAN SULLIVAN, Alaska
                                     JONI ERNST, Iowa
                                     LINDSEY O. GRAHAM, South Carolina

             Mary Frances Repko, Democratic Staff Director
               Adam Tomlinson, Republican Staff Director
                           
                           C O N T E N T S

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                           FEBRUARY 16, 2022
                           OPENING STATEMENTS

Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..     1
Capito, Hon. Shelley Moore, U.S. Senator from the State of West 
  Virginia.......................................................     3
Merkley, Hon. Jeff, U.S. Senator from the State of Oregon........     5

                               WITNESSES

Wind, Cory-Ann, Oregon Clean Fuels Program Manager, Oregon 
  Department of Environmental Quality............................     6
    Prepared statement...........................................     9
    Responses to additional questions from:
        Senator Carper...........................................    11
        Senator Capito...........................................    16
Skor, Emily, Chief Executive Officer, Growth Energy..............    17
    Prepared statement...........................................    19
    Responses to additional questions from:
        Senator Carper...........................................    40
        Senator Capito...........................................    47
    Response to an additional question from Senator Ernst........    50
Pugliaresi, Lucian, President, Energy Policy Research Foundation, 
  Inc............................................................    51
    Prepared statement...........................................    53
    Responses to additional questions from Senator Capito........    94
    Response to an additional question from Senator Inhofe.......    98
Koch, LeAnn Johnson, Partner, Perkins Coie, LLP..................   101
    Prepared statement...........................................   103
    Responses to additional questions from:
        Senator Carper...........................................   198
        Senator Capito...........................................   199
        Senator Shelby...........................................   202
        Senator Wicker...........................................   206

                          ADDITIONAL MATERIAL

U.S. oil & gas rigs in use per month, Statista, 2022.............   295
What is behind soaring energy prices and what happens next?, 
  International Energy Agency, October 12, 2021..................   297
EIA expects gasoline and diesel prices to fall in 2022 and 2023 
  as demand growth slows, U.S. Energy Information Administration, 
  January 13, 2022...............................................   301
Gasoline Explained, Gasoline Price Fluctuations, U.S. Energy 
  Information Administration, last updated September 9, 2021.....   303
Economy Statement by Benjamin Harris, Assistant Secretary for 
  Economy Policy, for the Treasury Borrowing Advisory Committee 
  January 31, 2022, U.S. Department of the Treasury..............   311
U.S. labor market shrugs off Omicron surge, economy strong ahead 
  of rate hikes, Reuters, February 4, 2022.......................   319
Union Jobs in Ethanol & Biodiesel Industries: An American Success 
  Story, Charles Carson et al., November 2021....................   327
Environmental outcomes of the US Renewable Fuel Standard, Tyler 
  J. Lark et al., Proceedings of the National Academy of 
  Sciences, accepted December 3, 2021............................   350
Analyzing the Downstream Impacts of U.S. Biofuel Policies, James 
  Davis et al., Agriculture & Applied Economics, University of 
  Georgia, June 16, 2021.........................................   358
A Preliminary Assessment of RIN Market Dynamics, RIN Prices, and 
  Their Effects, Dallas Burkholder, Office of Transportation and 
  Air Quality, U.S. Environmental Protection Agency, May 14, 2015   395
Denial of Petitions for Rulemaking to Change the RFS Point of 
  Obligation, U.S. Environmental Protection Agency, November 2017   426
Proposed RFS Small Refinery Exemption Decision, U.S. 
  Environmental Protection Agency, December 2021.................   513
Preliminary Rebuttal to PNAS Report: ``Environmental outcomes of 
  the U.S. Renewable Fuel Standard'' (Lark et al.), the Renewable 
  Fuels Association, February 14, 2022...........................   579
Carbon intensity of corn ethanol in the United States: state of 
  the science, Melissa J. Scully et al., Environmental Research 
  Letters, March 10, 2021........................................   587
GHG Emissions Reductions due to the RFS2--A 2020 update, Life 
  Cycle Associates, February 11, 2021............................   608
The greenhouse gas benefits of corn ethanol--assessing recent 
  evidence, Jan Lewandrowski et al., Biofuels, March 25, 2019....   631
Retrospective analysis of the U.S. corn ethanol industry for 
  2005-2019: implications for greenhouse gas emission reductions, 
  Uisung Lee et al., Biofpr, May 4, 2021.........................   647
Letter to Senator Ernst, written testimony of the Renewable Fuels 
  Association, February 16, 2022.................................   663
What Drives Retail Gasoline Prices? Not Renewable Fuel Standard 
  RINs, the Renewable Fuels Association, September 13, 2021......   687
Testimony of Clean Fuels Alliance America, February 16, 2022.....   691
Current Methods for Life Cycle Analyses of Low-Carbon 
  Transportation Fuels in the United States, National Academies 
  of Sciences, Engineering, and Medicine.........................   706
Closing the Transportation Emissions Gap with Clean Fuels, the 
  Rhodium Group, January 15, 2021................................   711
Statement of Principles on National Clean Fuels Policy...........   737
Letter to U.S. Representative Frank Pallone et al. from the 
  Advanced Biofuels Association et al............................   739
A Low Carbon Fuel Standard: In Brief, Congressional Research 
  Service, July 7, 2021..........................................   741
Clean Fuel Standards, A Proven Approach to Fuel a Low-Carbon 
  Future, Union of Concerned Scientists, November 2020...........   757
Letter to Senators Carper and Capito from U.S. Senators Dianne 
  Feinstein and Pat Toomey, February 24, 2022....................   761

 
THE ENVIRONMENTAL PROTECTION AGENCY'S RENEWABLE FUEL STANDARD PROGRAM: 
                      CHALLENGES AND OPPORTUNITIES

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                      WEDNESDAY, FEBRUARY 16, 2022

                                       U.S. Senate,
                 Committee on Environment and Public Works,
                                                    Washington, DC.
    The Committee, met, pursuant to notice, at 10:04 a.m. in 
room 106, Dirksen Senate Office Building, Hon. Thomas R. Carper 
(Chairman of the Committee) presiding.
    Present: Senators Carper, Capito, Cardin, Whitehouse, 
Merkley, Stabenow, Inhofe, Cramer, Lummis, Boozman, Wicker, 
Sullivan, and Ernst.

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

    Senator Carper. Good morning, everybody. I am pleased to 
call this hearing to order.
    Today, we are going to examine the Environmental Protection 
Agency's Renewable Fuel Standard Program. This includes 
management and implementation challenges, as well as 
opportunities to encourage greater deployment of more 
sustainable fuels. My staff tells me that our Committee has not 
held an oversight hearing on this topic since 2016. This has 
gone on 6 years. It is probably time.
    To help inform our discussion, we are fortunate to have an 
expert panel of witnesses who are joining us today.
    We want to thank all of you for participating in this 
meeting discussion.
    Winston Churchill is credited with saying a lot of things. 
One of my favorite Churchill quotes is, ``The further back you 
look, the further forward you see.'' We are going to take a 
moment, if you will, to understand the history of this program 
and how we got to where we are today.
    In the early 2000s, our Nation's energy future didn't look 
all that promising. Americans were consuming more and more 
gasoline and diesel fuel. We were incredibly relying on 
imported oil to fuel this growth, and that reliance was 
increasing. As a result, global oil prices were on the rise 
without any indication of slowing down, and consumers were 
paying more at the pump every year.
    At the time, a bipartisan group of us in Congress took 
several steps to improve our Nation's energy future, and I 
would say, with the leadership of the President at the time, 
George W. Bush. Among those steps, we created and expanded the 
Renewable Fuel Standard under the Clean Air Act. Our goals 
included providing new economic opportunity for our farmers 
while also lowering our dependence on foreign oil and reducing 
greenhouse gas emissions from the fuel we burn in our cars and 
trucks and vans.
    Since the implementation of the program, we have come a 
long way toward achieving our goals. Economic growth in 
agricultural communities has expanded, and our fuels have 
become significantly cleaner than they were two decades ago. In 
fact, the Renewable Fuel Standard presents economic and energy 
opportunities for the people in Delaware and every other State 
to seize.
    Like many of our colleagues on this Committee, I still 
support the goals of the Renewable Fuel Standard. Having said 
that, there have been a number of challenges when it comes to 
the implementation of the program, as we know.
    For example, the amount of advanced renewable fuels used 
today in this country is far less than the 36 billion gallons 
that Congress and the President mandated in 2007 to be used by 
2022. That shortfall is partly due to unforeseen market 
challenges, and it is partly due to EPA's delay in approving 
new fuels to enter the marketplace.
    Make no mistake, advanced renewable fuels are being 
produced that have the potential to replace gasoline, diesel, 
and jet fuels on a gallon for gallon basis in today's 
combustion engines with no loss of performance. Many of these 
advanced fuels have already been approved for use in State 
renewable fuel programs in States like Oregon.
    However, EPA has been slow to make decisions on new 
advanced biofuel applications and pathways for usage. At the 
same time, the Clean Air Act prohibits some of the advanced 
renewable fuels that qualify for State programs from qualifying 
as renewable fuel under the Federal program.
    We must find better ways to allow new advanced renewable 
fuels to qualify for the Renewable Fuel Standard. Doing so 
would be good for our environment, would help refineries meet 
their obligations, and further support a growing domestic 
biofuel industry.
    Another challenge in implementing the Renewable Fuel 
Standard is the volatility in compliance costs for refineries. 
Years of mismanagement under the previous Administration, 
coupled with the unexpected changes in both fuel supply and 
demand caused by the pandemic, have collectively wreaked havoc 
on the program's compliance market, known as the RIN market.
    What is the RIN market? EPA tracks compliance with the 
Renewable Fuel Standard by using tradable credits, referred to 
as renewable identification numbers, or RINs. Refiners and 
importers can generate RINs either by blending biofuels into 
fuel or by purchasing RINs from another party through what is 
known as the RIN market.
    The huge price swings in RIN costs, from 30 cents to almost 
$2 per gallon of renewable fuel in less than 2 years, have 
created financial uncertainty for just about everybody, 
especially those who are required to comply with the Renewable 
Fuel Standard. That, in turn, has made it extremely difficult 
for obligated parties to make forward thinking investments in 
producing cleaner fuels. We must help reduce the volatility in 
compliance costs for this program to be successful.
    As a recovering Governor, when exploring ways to improve 
Federal policies, I oftentimes look to see what is working in 
our States, the laboratories of democracy, and see if we can 
maybe replicate some of them.
    Many States, like California, like Oregon, have implemented 
technology neutral low carbon fuel standards. These standards 
have successfully advanced cleaner fuel usage, kept consumer 
and compliance costs low, all while fostering local clean fuel 
investments and job creation. As we will hear today, these 
State programs have fuel flexibilities, long term 
predictability, and cost containment provisions that are not 
included in the Renewable Fuel Standard today, but maybe they 
should be.
    In closing, as one of the strongest supporters of electric 
vehicles in the Senate, I know it is important to remember that 
we aren't yet in a post-liquid fuel world. We must retain our 
domestic capabilities to produce and refine the motor vehicle 
fuels that power our lives, while also ensuring that these 
fuels are as clean as possible in order to meet our climate 
goals.
    We look forward to hearing from our witnesses today, but 
before we do that, let me turn to Senator Capito, who is off of 
the DL, off of the disabled list, after a very brief stay 
there.
    Happy you are back and looking great. You are recognized 
for your opening statement.

        OPENING STATEMENT OF HON. SHELLEY MOORE CAPITO, 
          U.S. SENATOR FROM THE STATE OF WEST VIRGINIA

    Senator Capito. Thank you, Mr. Chairman. It is nice to be 
back in the Nation's capital, so I appreciate that.
    I want to thank you for calling today's hearing, and I also 
want to thank our witnesses for joining us here today.
    The Renewable Fuel Standard, as the Chairman defined it, 
known as RFS, is an important topic for our Committee, but we 
haven't had that hearing since 2016. I think the long gap 
between hearings sort of speaks to the intricacies of the 
program, but it also is the fact that the potential fault lines 
between opponents, supporters, and would be reformers do not 
always align between one party or another.
    For my part, there are a few issues I would like to cover 
today during this hearing: Small refinery exemptions is one, 
the changes to the program coming in the year 2022, and the 
need for accountability from EPA's Office of Air, including the 
need for a nominee to head it.
    I would like to highlight my concern about the two actions 
that the EPA recently announced. First, in December, the agency 
proposed an all time high Renewable Volume Obligation for 2022 
that does not really reflect, I don't think, market realities. 
I would be interested to hear what our panel has to say about 
that. I am concerned that this volume obligation is going to 
raise costs at a time when gasoline is high in and of itself, 
impacting American consumers and the economy.
    Second, also in December, EPA also announced a proposal to 
deny all pending small refinery exemptions, which provide 
critical relief to small refineries experiencing financial 
hardships that are imposed by the RFS program. This action runs 
counter to the congressional intent under the Clean Air Act.
    EPA's proposed action will negatively impact Ergon, a small 
refinery located in northern West Virginia. Ergon has already 
won two court cases in the Fourth Circuit finding that the EPA 
acted in an arbitrary and capricious manner in denying its 
small refinery exemption petitions, but Ergon is just one of a 
number of small refineries around the country that had 
petitions pending before the EPA.
    This unprecedented and drastic step to propose a blanket 
denial of outstanding small refinery hardship petitions is 
especially puzzling as we see increasing gasoline prices and 
several small refinery closures around the Nation, eliminating 
good paying jobs in some of our rural communities as well. 
Ultimately, this proposal will only lead to more litigation and 
increased uncertainty under the RFS, with American consumers 
bearing the costs amid already record high inflation.
    I have urged EPA to reconsider its proposal to provide much 
needed relief for small refineries and the families and 
businesses being harmed by elevated fuel costs. I look forward 
to hearing more from our witnesses on this issue.
    Next, I would like to touch on an issue that I believe many 
of us agree upon, and that is that our liquid fuels, and the 
Chairman touched on this, are still very, very important. I can 
tell you first hand, liquid fuel is not going away any time in 
my State of West Virginia.
    Forcing a single technology approach, such as insisting on 
100 percent electric vehicles, disregards the important fact 
that different communities and businesses have different needs 
for transportation solutions. It may be true that electric 
vehicle sales are slowly but surely increasing, but liquid fuel 
is not used exclusively in passenger vehicles. It is also 
important for heavy duty trucks and our airplanes, to name a 
few.
    So, one issue I would like to hear about today is how 
important are liquid fuels, and do you think liquid fuels are 
going away anytime soon. This conversation on liquid fuel is 
especially important as the RFS program enters a new phase next 
year.
    When Congress enacted the RFS, annual volumes were included 
for the calendar years 2006 through 2022, but after 2022, EPA 
has the power to determine the annual volume amounts. The 
Chairman pointed out that we are not even hitting the amounts 
that we are supposed to be hitting as it is now. EPA is 
expected to issue a rule to do just that sometime this year. 
However, I have concerns about how EPA plans to take action on 
this program without anyone in a Senate confirmed role in the 
office that handles the RFS Program.
    The Office of Air and Radiation at EPA, this is the office 
that is in charge of air emissions and climate issues, and it 
handles the renewable fuel standard and many other complex 
regulatory programs. Yet we have been waiting for more than a 
year for the Administration and the President to name a nominee 
to that office. I have talked about this more than once in our 
Committee. Instead, Principal Deputy Administrator Joe Goffman 
has served as the lead political official in the office, in 
regular communication with his former boss, the climate czar in 
the White House, Gina McCarthy.
    No incoming Administration has waited this long to send up 
a nominee for this critical position since its creation. The 
previous record was 260 days, set by President Clinton. If EPA 
is deciding important actions related to the future of the RFS 
program, the Administration needs to send up an Office of Air 
and Radiation nominee who can be accountable to Congress.
    With that, Mr. Chairman, I yield back my time.
    Senator Carper. Thank you very much for those comments.
    Now, we are going to turn to our esteemed panel of 
witnesses. In a couple minutes, we will hear from them in this 
order: First, Cory-Ann Wind, the Clean Fuels Program Manager at 
the Oregon Department of Environmental Quality. Second, we will 
hear from Emily Skor, Chief Executive Officer of Growth Energy. 
Third, we are going to hear from Lucian Pugliaresi.
    Lucian, would you just say your name for us?
    Mr. Pugliaresi. Lucian Pugliaresi.
    Senator Carper. All right, Lucian Pugliaresi, thank you.
    Next, the President of the Energy Policy Research 
Foundation. Finally, last but not least, we are going to hear 
from LeAnn Johnson Koch, Partner at Perkins Coie.
    Before our witnesses begin their testimony, I will turn it 
over to our colleague, Senator Merkley, to introduce one of our 
witnesses.
    Senator Merkley, the floor is yours. Thank you.

            OPENING STATEMENT OF HON. JEFF MERKLEY, 
             U.S. SENATOR FROM THE STATE OF OREGON

    Senator Merkley. Thank you very much, Mr. Chairman and 
Ranking Member Capito and fellow Committee members, for today's 
hearing looking at the Renewable Fuel Standard.
    As we look around the world at all the visible and 
measurable signs of global climate change, we need to adopt 
cleaner forms of energy and end our dependence on carbon 
emitting fossil fuels. It is plain to see.
    And I believe we have an incredible opportunity to reduce 
emissions by electrifying our cars and trucks. The investments 
we have made in the Infrastructure Investment and Jobs Act, as 
well as the ones we want to make in Build Back Better, are 
important steps toward that goal. But there is no doubt that 
sustainable liquid fuels are going to play an important role 
for years to come as we strive to tackle the challenge of 
global climate chaos.
    Not all of the solutions are going to start with the 
Federal Government. We are going to see States innovate, and we 
need to learn from them. This is something we have recognized 
back home in Oregon, as year after year, we confront fiercer 
wildfires devastating our forests, historic droughts 
devastating our ranching and farming communities, and having a 
huge impact on the health of our lakes and streams, and 
acidifying oceans that is wreaking havoc on our sea life off 
the Oregon coast, and certainly on our fishing community.
    Oregon has stepped up to do more through the Oregon Clean 
Fuels Program. Since it began almost 6 years ago, it is a 
resounding success. Through this program, our State has reduced 
a significant amount of greenhouse gas emissions from 
transportation fuels and put us on track to meet our goal of a 
10 percent reduction within the next 3 years.
    I think that the success we had back home in Oregon can and 
ought to help inform the discussion for our Nation regarding 
the Federal fuels policy. Oregon stands as an example of fact 
that a low carbon fuel standard can work in the transportation 
sector, which is why I am delighted to introduce my fellow 
Oregonian, previously from Hawaii but now many decades in 
Oregon, is Cory-Ann Wind, the manager of the Oregon Clean Fuels 
Program.
    She is a proud graduate of Oregon State University, with a 
degree in bioresources engineering. She has been an integral 
member of Oregon's Department of Environmental Quality for 
almost three decades, working the last 12 of them in fuels and 
transportation and climate policy.
    As the head of the Clean Fuels Program, Ms. Wind is 
responsible for coordinating between the State fuel importers 
affected by the regulations and the clean fuels industry to 
ensure that everyone has the tools and technical assistance 
necessary to transform our fuel market.
    She works to ensure that our rules and regulations align 
with those of neighboring States, certainly Washington and 
California, to help make sure that the States along the West 
Coast are moving in the same direction.
    So I am thrilled that she is with us today through the 
miracle of electronics to share her experiences about what has 
worked in Oregon and how those successes can be implemented on 
a larger scale.
    Thank you, Mr. Chairman.
    Senator Carper. Thank you, Senator Merkley, very much.
    Now, we are going to begin our witness testimony. We are 
going to start off with Ms. Wind.
    I am going to ask you to please proceed with your statement 
if you are ready. Go right ahead.

STATEMENT OF CORY-ANN WIND, OREGON CLEAN FUELS PROGRAM MANAGER, 
           OREGON DEPARTMENT OF ENVIRONMENTAL QUALITY

    Ms. Wind. Good morning, Chair Carper, Ranking Member 
Capito, and members of the Committee.
    For the record, my name is Cory-Ann Wind, and I work for 
the Oregon Department of Environmental Quality as the Oregon 
Clean Fuels Program Manager.
    Thank you for the invitation to speak to you today about 
the Oregon Clean Fuels Program, which is Oregon's version of 
the low carbon fuel standard. I would also like to thank, at 
this time, Senator Merkley, for the very nice introduction and 
for your continued leadership in addressing the climate crisis.
    The Clean Fuels Program is one of Oregon's most successful 
statewide policies for addressing the State's contribution to 
global climate change. The program began in 2016, and thus far, 
the program's success and progress can be summarized in three 
distinct outcomes.
    First, the companies that are producing biofuels are making 
those fuels more cleanly and delivering them in greater volumes 
to Oregon. The carbon intensity of the ethanol and biodiesel 
that Oregon uses has decreased, and we have seen significant 
increases in the blending of biodiesel and renewable diesel in 
recent years. Renewable forms of diesel, natural gas, propane, 
and electricity have all entered the Oregon market since the 
beginning of the program and have emerged as commercially 
viable and cost effective replacements of their fossil 
versions.
    Electricity will become increasingly important as new 
regulations and incentives for vehicles and infrastructure are 
implemented. All of these fuels have played an important role 
in reducing about 6 million tons of lifecycle greenhouse gas 
emissions so far and displacing over a billion gallons of 
fossil fuels in Oregon.
    Second, the transition from fossil fuels to biofuels and 
electricity is reducing tailpipe emissions in Oregon and 
improving the public health of Oregonians. In addition to 
reducing greenhouses gases, low carbon fuels also emit less 
carbon monoxide, nitrogen oxides, and particulate matter 
compared to fossil fuels.
    Reducing these pollutants has saved Oregonians millions of 
dollars in avoided health costs over the years. And this is 
especially important for Oregon's historically overburdened 
communities that are located near transportation corridors, 
multimodal facilities, and distribution hubs.
    And third, the program has spurred innovation and 
investment without impacting the price at the pump. The program 
has fostered a $100 million a year-plus market where 
investments are being made to increase the production of lower 
carbon fuels, spark new innovations in technology, and invest 
in infrastructure to deliver these fuels across the State. 
These investments have allowed the transition from fossil 
products to cleaner fuels to happen without any significant 
rise in retail or wholesale prices when compared to our 
neighboring States, even those that do not have similar fuel 
regulations. In fact, the program has lowered the cost of many 
low carbon fuels and has created a powerful financial incentive 
to decarbonize the transportation sector.
    The Clean Fuels Program that we have created in Oregon 
takes the best parts of the Renewable Fuel Standard and 
combines it with the best parts of a low carbon fuel standard. 
The Renewable Fuel Standard creates the base demand for 
biofuels that are needed to begin the transition to lower 
carbon fuels, and the low carbon fuel standard ensures that the 
lowest of the low carbon fuels comes to Oregon.
    Participants can stack the value of the credits from the 
Renewable Fuel Standard with the credits from the low carbon 
fuel standard, as both are necessary to provide the necessary 
incentives to fuel providers to continue to lower their carbon 
intensities. The market also benefits from the long term 
certainty from the low carbon fuel standard programs that have 
established targets through 2030. And Oregon is currently in a 
rulemaking that will extend its targets and establish standards 
through 2035, but we have not done this alone.
    Oregon has benefited greatly from being a signatory to the 
Pacific Coast Collaborative. Since 2013, British Columbia, 
Washington, Oregon, and California have worked together to 
harmonize best practices for policy alignment, program design, 
and implementation to create the largest market for cleaner, 
low carbon fuels on the West Coast.
    This collaboration has grown to other States that are now 
also looking for smart strategies to reduce transportation 
emissions, ones that can build off of strong Federal support of 
the agriculture and biofuels industry, zero emission vehicle 
standards, and investments in electric vehicle charging and 
alternative vehicle fueling infrastructure.
    That concludes my testimony for today. I am happy to take 
any questions that you might have. Thank you again for the 
invitation to be here.
    [The prepared statement of Ms. Wind follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Carper. We are delighted that you are here. Thank 
you so much. I like to say, find out what works, do more of 
that. Sometimes those States come up with some pretty good 
ideas that we would benefit from. Thank you very much for your 
testimony.
    Next, we are going to hear from Ms. Skor.
    Ms. Skor, please proceed. Thanks so much for joining us. 
Nice to see you.

                   STATEMENT OF EMILY SKOR, 
             CHIEF EXECUTIVE OFFICER, GROWTH ENERGY

    Ms. Skor. Nice to see you, Chairman Carper, Ranking Member 
Capito, and members of the Committee. Thank you for the 
opportunity to testify today.
    I am Emily Skor, CEO of Growth Energy, the world's largest 
biofuel trade association.
    The RFS remains the Nation's most successful clean energy 
policy, yet its full potential as a climate solution remains 
untapped. For the past 8 years, a lack of accountability and 
failure to comply with the law has slowed progress in carbon 
reductions.
    But today, as Congress looks to immediately reduce the 
carbon intensity of our Nation's transportation fleet, it is 
imperative that biofuels like ethanol, the most affordable and 
abundant source of low carbon, high octane fuel on the planet, 
are part of our transportation mix now and into the future.
    Let me be clear: There is no path toward net zero emissions 
by 2050 without biofuels. Ninety-eight percent of the cars on 
the road today use liquid fuels, and EIA projects that gasoline 
or flex fuel powered vehicles will dominate new vehicle sales 
through 2050.
    We can achieve progress in carbon reductions with today's 
infrastructure, today's vehicles, and a home grown supply chain 
through a robust and binding Renewable Fuel Standard and 
acceleration toward nationwide, year round use of lower cost 
biofuels like E15.
    To date, the RFS has reduced almost 1 billion metric tons 
of greenhouse gas emissions. Expanded use of low carbon biofuel 
cuts emissions in air pollution, drives energy innovation and 
economic growth, creates biomanufacturing jobs, and lowers gas 
prices for American drivers.
    But since 2013, the RFS has consistently been undermined 
through the abuse of waivers, small refinery exemptions, and 
compliance deadline extensions. Most of these administrative 
actions have been to appease the unfounded claims of a select 
few looking to subvert the RFS, slowing progress in carbon 
reductions.
    EPA's recent proposals, delayed as they are, right some of 
these wrongs. They include the required 15 billion gallons of 
conventional biofuel in 2022, a long overdue remedy for EPA's 
unlawful 2016 general waiver, and an end to the abuse of small 
refinery exemptions.
    Despite these positives, EPA takes a major step backward by 
seeking to reduce the 2020 blending obligations finalized 2 
years ago. This retroactive change exceeds the agency's 
authority and creates market disruption and uncertainty. EPA 
needs to fix and finalize the proposals as soon as possible.
    Looking forward, to achieve our shared clean energy goals, 
we need year round access to higher blends of ethanol, like 
E15. Nationwide, E15 would slash CO2 emissions by 
more than 70 million tons, support more than 180,000 new jobs, 
and save consumers more than $12 billion in annual fuel costs.
    Unfortunately, refiners successfully sued to prevent E15 
from being sold in the summer throughout much of the country. 
Not only have they deprived consumers of a lower cost fuel, 
they eliminated an easy path for their own RFS compliance. 
Without immediate action, consumers will lose access to their 
most affordable fueling option on June 1st, when Americans 
drive the most. Congress or EPA must restore market access so 
drivers can save up to 10 cents per gallon every time they fuel 
up with E15.
    In addition to reducing emissions in light duty vehicles, 
biofuels are poised to play a greater role in decarbonizing 
other forms of transportation, and biorefineries are already 
deploying carbon capture and wind and solar energy and 
incentivizing sustainable farming practices, all to drive 
further innovation and further reductions in our carbon 
intensity. We see promise in new and emerging low carbon fuel 
markets in hard to electrify sectors, like aviation, marine, 
and heavy duty vehicles.
    To lead our Nation through a clean energy transition, we 
must have a healthy and thriving biofuel industry. We must have 
a strong and growing RFS. We must move toward E15 as the 
Nation's standard fuel.
    Don't be fooled: The RFS does not harm refiners. Three 
Administrations and the courts have affirmed this. Claims to 
the contrary are just a smokescreen to divert attention away 
from clean, affordable, American energy. Undermining the RFS 
and delaying the rollout of E15 means increasing gas prices for 
American consumers, period. Yes, prices are driven by the price 
of crude, not the cost of the RFS.
    America's farmers and biofuel producers are ready to work 
with the Administration and Congress to restore E15 and put the 
RFS back on track.
    Thank you, and I look forward to your questions.
    [The prepared statement of Ms. Skor follows:]
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    Senator Carper. Thanks very much for joining us, and for 
your testimony.
    Mr. Pugliaresi, you are recognized. Please proceed.

                STATEMENT OF LUCIAN PUGLIARESI, 
       PRESIDENT, ENERGY POLICY RESEARCH FOUNDATION, INC.

    Mr. Pugliaresi. Thank you, Senator.
    Could we queue up the charts, please?
    Chairman Carper, Ranking Member Capito, members of the 
Committee, thank you for this opportunity to make some comments 
on the EPA's Renewable Fuel Standard and our management of the 
program.
    I am President of the Energy Policy Research Foundation. We 
have been around since 1944. I also want to thank EPRINC's 
Senior Director, Max Pyziur, for helping me with the testimony 
and the preparation of the charts.
    The first thing I would like to say is that in all our work 
over the years, and we testified here, actually, in 2016, we 
have always said that biofuels, and particularly ethanol, 
represent a very important component of the fuel supply for the 
U.S. It is a very cost effective way to get octane and extend 
the supply.
    A basic criticism of the program is not in with biofuel; it 
is with the mandate. Let's go to the first chart. As you can 
see in the first chart, and Chairman Carper talked about this 
already, we are not hitting the original targets of the Energy 
Security Act. In fact, there are a lot of reasons for that. You 
can see now we are about 20 billion against the initial 
proposed target of 36.
    The basic reason we are not hitting the target is because 
our expectations were wrong. There is a lot of uncertainty in 
the future of oil and gas prices and supply and demand, and in 
2007, expectations were that gasoline demand was going to grow 
dramatically by about 30 percent over the next 20, 30 years. In 
fact, it declined dramatically.
    And this made it more difficult to incorporate biofuels 
because when biofuels become a large percentage of the gasoline 
pool, the costs rise. There are actually quite low cost and 
actually save money up to around the 10 percent, above 10 
percent, compliance costs rise. You can see this here.
    This is actually very interesting to us, because when we 
testified in 2016, we informed the Committee that there was a 
certain price risk to the program, that if you try to drive 
these biofuels by mandates above 10 percent of the gasoline 
pool, the compliance costs escalate.
    As Chairman Carper pointed out, the RIN credits are one way 
to understand what the program costs. We estimated that, using 
the CBO scenarios alone, that the increase in the cost of the 
program per gallon to consumers could be anywhere from 30 to 50 
cents. Well, today, RIN prices are driving up the cost of 
gasoline about 28 and a half to 30 cents.
    You can see this is something called the crack spread. I am 
not going to bore you with this, but in a way, the crack spread 
is what it costs to take crude oil and turn it into gasoline, 
diesel fuel, and other petroleum products.
    You can see here that when we had a period, and LeAnn is 
going to talk a lot about this, but before EPA changed the rule 
on how to treat the credits under the exemption, the small 
refiner exemptions were driving down RIN prices, because it 
essentially increased the volume, but that program has ended. 
Combined with the acceleration in prices as we come out of the 
COVID, we now have very high RIN prices in the U.S., and these 
are reflected in this chart.
    The other issue I would like to point out is that we are 
now entering a period of very high oil prices. And in this 
period, preceding this, prices were low, and a lot of the costs 
of the program were masked, because as Ms. Skor pointed out, a 
big percentage of the cost of gasoline and products is crude 
oil.
    I would like to show you here, from California, the problem 
is yes, crude oil might be contributing about $2, but an array 
of programs, low carbon fuel standard, RFS, Federal taxes, all 
of these are contributing to the cost. So, we just have to keep 
this in mind, that one of the components of high gasoline 
prices are these programs.
    I think I will just flip to the end of my comments here. As 
we go forward, our future is very uncertain. I really encourage 
Congress to give some guidance to EPA, because unless we have a 
set of programs which are robust against uncertainty, we are 
likely to have a lot of dislocations. This is the fundamental 
problem with the program, which is the mandate.
    Thank you so much.
    [The prepared statement of Mr. Pugliaresi follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Senator Carper. Mr. Pugliaresi, thank you very, very much.
    Last, but not least, we will listen to Ms. Koch.
    We thank you for your testimony. Please proceed.

               STATEMENT OF LEANN JOHNSON KOCH, 
                   PARTNER, PERKINS COIE, LLP

    Ms. Koch. Thank you, Chairman Carper, Ranking Member 
Capito, and members of the Committee, for the opportunity to 
talk about the Renewable Fuel Standard.
    I have spent the entirety of my 30 year career representing 
the petroleum refining industry, and particularly, small 
refineries. I know their companies; I know their people; I know 
their communities, and now I also know the very real threat 
they face as a result of EPA's proposal to end small refinery 
hardship relief under the Renewable Fuel Standard.
    I am referring, of course, to what Senator Capito 
described: EPA's December 7, 2021, proposal to issue a blanket 
denial of all pending small refinery hardship petitions. The 
EPA's deadline to issue their decisions was 90 days after the 
petitions were submitted. Instead, they now intend to deny them 
retroactively, causing small refineries to enter the market to 
buy RINs at their near record highs.
    Most important and most telling is the fact that EPA's 
proposed denial did not reference its legally required 
consultation with the Department of Energy, and the Department 
of Energy's conclusion that if EPA acts as they propose to do, 
small refineries will be at risk of shutdown and bankruptcy. 
Notwithstanding that advice from the Department of Energy or 
legally required consultation, EPA is moving ahead with its 
plans. Certainly, this was material information to parties 
asked to provide comments on the fate of small refineries.
    Senators, I am sure you are acutely aware of the fact that 
gas prices are at their highest levels in 8 years, and that the 
inflation rate is increasing faster now than in the last 40. 
And we are at a crossroads. If EPA persists ignoring its 
statutory duty and taking aim at America's small refineries, it 
will not only violate the law, it will exacerbate these already 
adverse economic conditions that our country faces. The harm to 
refineries and to the U.S. economy will be harm for harm's 
sake, because denying small refinery hardship relief cannot and 
will not affect 1 gallon of biodiesel. No biodiesel blending 
will be lost.
    At Congress's direction, the Department of Energy in a 2011 
report determined that small refinery hardship would grow 
increasingly acute as the volume mandates increase, because as 
the volume mandates increase, RIN prices increase. When RIN 
prices increase, small refineries' costs increase, and that is 
because small refinery hardship is caused by their limited 
ability to blend, not their unwillingness to blend.
    EPA's 2021 proposed denial concludes that a small refinery 
with limited access to renewable fuel blend stocks, no 
downstream blending capability, no retail capability, no 
pipelines to access lucrative product markets, will have the 
exact same costs to the penny to comply with the Renewable Fuel 
Standard as the largest integrated oil company in the United 
States, companies that have the ability to export their fuel 
and avoid the RFS mandate completely, companies with the 
ability to blend others' fuels, fuel produced by small 
refineries, to generate excess RINs, and the ability to take 
those excess RINs and trade them, speculate in them, in the 
wholly unregulated $30 billion RIN market. Large, integrated 
refineries report in their public reports earning tens of 
millions of dollars in profits speculating in RINs.
    I listened to a hearing talking about the harm to the 
biofuels industry from granting small refinery hardship relief, 
which is a fiction. Small refineries, first of all, 
disproportionately produce diesel, not gasoline. They blend as 
much ethanol as they can, but gasoline is a small part of their 
production. The data demonstrate that there is zero correlation 
between small refinery hardship relief and the blend rate, 
generally. So, in the years when the hardship relief was 
granted more than in prior years, there was zero impact on the 
blend rate.
    This is a question that we have to have Ms. Skor explain to 
us, because there is clearly no correlation between the two.
    Forcing small refineries to buy RINs in record high RIN 
prices will result in their failure. It will result in their 
closure, and it will result in their bankruptcy, according to 
the Department of Energy, and EPA needs to step back.
    [The prepared statement of Ms. Koch follows. Due to size 
constraints some documents are not included below but are 
available in Committee files.]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Senator Carper. Ms. Koch, thank you so much.
    Before we begin questions, I am going to ask unanimous 
consent to place into the record materials on historical fuel 
and energy prices.
    Hearing no objections, so ordered.
    [The referenced information follows. Due to size 
constraints a document is not included below but is available 
in Committee files.]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Senator Carper. All right. Let's ask some questions.
    Ms. Wind, the past Administration's mismanagement of the 
Renewable Fuel Standard, along with the ongoing fuel impacts of 
the pandemic, have created volatile swings in compliance costs 
for the Renewable Fuels Program in recent years, making it hard 
for all stakeholders to plan and invest to meet the program's 
requirements. It is my understanding that Oregon has not 
experienced the same volatility in compliance costs with its 
Clean Fuels Program.
    My question is this: How have the flexibilities built into 
Oregon's low carbon fuel standard, along with the additional 
cost containment and other measures within Oregon's program 
that differ from the Federal program, how do they help to 
mitigate compliance cost spikes?
    Ms. Wind.
    Ms. Wind. Yes, thank you for that question, Chair Carper. I 
think a lot of what is built into the program is the ability 
for the agency to monitor the costs. We do, of our neighboring 
States in comparison to the State of Oregon, we do routinely 
track the fuel retail and wholesale prices of fuels that are 
delivered in California and Washington, and in Idaho.
    For the past years that we have been operating the program 
in Oregon, we have not seen a significant increase in 
comparison to those States. Those are States that also don't 
necessarily, in the State of Idaho, don't have any kind of 
additional fuel standards.
    We do keep track of those prices, and we are legislatively 
required to have cost containment mechanisms in the program to 
be able to monitor those fuel prices. I think it is a 
combination of the monitoring and the cost containment 
mechanisms that have not caused these large volatilities in the 
fuel prices in Oregon.
    Senator Carper. All right, thanks a lot. Just a quick 
follow up: It is my understanding that Oregon tracks consumer 
fuel costs and the surrounding States' consumer fuel costs as 
part of its implementation of the low carbon fuel standard. 
Very briefly, are there surrounding States that do not have a 
low carbon fuel standard today that have higher fuel costs than 
Oregon?
    Ms. Wind. Thank you for that question, Chair Carper. As I 
previously stated, in the most recent analysis of the data that 
we have been looking at, we do compare our fuel prices, both 
retail and wholesale, to the States of Washington and 
California and Idaho. It is noted that our fuel prices in 
Oregon have shown that we are lower than even the State of 
Idaho.
    The State of Idaho does not have any additional fuel 
regulations. They don't have a low carbon fuel standard in 
place there. We feel confident that the prices of the fuels in 
Oregon are not being disproportionately impacted by the fact 
that we do have a low carbon fuel standard.
    Senator Carper. All right, thanks for that.
    One question for Ms. Skor, if I could, on E15 and advanced 
biofuels.
    Ms. Skor, recent court decisions prevent the sale of fuels 
that have blends of ethanol to 15 percent, known as E15, this 
coming summer, unless Congress or the Administration takes some 
further action. At the same time, EPA, over the course of 
several different Administrations has been slow to approve 
advanced biofuel applications for new pathways and fuels for 
the Renewable Fuel Standard.
    The question is this: In your mind, would the approval of 
additional advanced biofuel applications and Congress acting to 
allow E15 to be sold year round help mitigate some of the 
volatility in the renewable fuel program costs that we are 
seeing today?
    Ms. Skor. Thank you, Chairman. It most certainly would. The 
easiest path to bring down the price of the RIN is to blend 
more biofuel. It is basic supply and demand. The more biofuels 
blended, in particular higher blends like E15, the more RINs 
created. That is how you bring down the price of the RIN.
    Not only will it address the stated cost, but you are also 
going to be introducing a lower cost fuel into the fuel supply 
for consumers, and there are also technologies languishing in 
EPA that I have got producers currently producing cellulosic 
ethanol. They are not getting credit for it, because the 
application has been sitting around for 5 years.
    There is more innovation that we can do to bring low cost, 
low carbon fuels to the table, but we do need some certainty 
and some predictability and for the regulations to keep up with 
the marketplace and the innovation.
    Senator Carper. All right. I have plenty more questions, 
but I am going to yield, at this point, to Senator Capito. 
Thank you for those responses.
    Senator Capito. Thank you, Mr. Chairman.
    Ms. Koch, in your remarks, you were pretty clear about the 
small refinery exemption. Obviously, I mentioned that in my 
opening remarks, my concern. You are probably aware of the case 
that I brought forward of Ergon in West Virginia, who has two 
favorable court decisions from the Fourth Circuit.
    Shouldn't EPA take into consideration that our courts have 
actually taken into consideration making regulatory decisions, 
and that this was causing hardship to this small refinery? How 
would you respond to EPA's blanket denial of everything, when 
the courts have actually come forward and said it is not a 
sound decision?
    Ms. Koch. Yes, Senator Capito. You are exactly right. For 
the 2016 to 2018 compliance years, the Fourth Circuit Court of 
Appeals vacated and remanded EPA's decision to deny hardship 
relief to Ergon West Virginia. Ergon runs about 23,000 barrels 
per day. It is truly one of the smallest refineries in the 
country. And the court summarily rejected EPA's decision 
because EPA did not consider the facts of Ergon's specific 
case: Its location, how it distributes its fuels, the fact that 
70 percent of its then production was diesel, and it remanded 
to EPA.
    EPA then took another shot at Ergon and again, denied 
Ergon's petition, even though it had been vacated and remanded 
by the court, and again, determined that Ergon was ineligible. 
The second time, the Fourth Circuit vacated EPA's decision 
again, this time, finding that EPA had been arbitrary and 
capricious in treating Ergon differently than any other small 
refinery.
    Now, this is the third attempt to prevent Ergon West 
Virginia from receiving hardship relief. Essentially, what EPA 
is proposing to do is Ergon and every other small refinery in 
the United States will be denied hardship relief.
    If EPA proceeds on this path, ironically, on the basis that 
every refinery in the United States, from the largest 
multinational oil company to the tiniest, small refinery in 
Newell, West Virginia, has exactly the same cost of compliance. 
It doesn't matter that a large, integrated oil company can 
export. It doesn't matter that a large, integrated oil company 
has excess RINs and makes millions in speculation. Everybody's 
cost is the same.
    I always go back to the DOE study prepared for Congress, 
which explains the hardship that small refineries will suffer 
as a result of their inability to blend, as a result of their 
inability to take massive amounts of capital and joint venture. 
So yes, you are correct, Senator, that this is the third 
attempt to divest Ergon of relief.
    Senator Capito. Right. We specifically in the law made 
provisions for a small refinery exemption, correct?
    Ms. Koch. Specifically made provisions for each petition to 
be decided on its merits, that is correct.
    Senator Capito. Right, thank you.
    Mr. Pugliaresi, your last chart, I was looking through your 
charts, because we have them in our book, talks to me about 
where we see gas prices going and who really gets hurt the 
most. This talks about the rising costs of transportation fuels 
harm low income and many minority communities. We know that if 
you have to pay an extra $10 to $15 to fill your car up, that 
hits that person that, at the end of the month, is looking for 
an extra $10 or $15 to help pay their electric bill or some 
other bill that is also rising at the same time.
    You talked about the cost of blending is about 28 to 30 
cents per gallon, so there is a cost there. You also mentioned 
to me earlier, before we got started, that you think, as we are 
moving forward, there are some guardrails that EPA needs to 
have as we are moving forward, that we could provide for them.
    If you want to talk about that issue, I would like to hear 
that, but I would also like to hear your opinion on the overall 
cost of what we see now, the high cost of gasoline and how we 
can deal with this issue of who is hitting it the hardest, and 
how it can move. There are proposals out here to get rid of the 
gas tax, but that is 18 cents. That is not even close to this.
    Mr. Pugliaresi. First, let's talk a little bit about the 
sort of government mandated energy transition, because we are 
the largest oil and gas producer in the world. We are very 
concerned that certain policies are now seeking to constrain 
the North American production platform before the alternatives 
are ready.
    We are going to produce a lot of EVs; we are going to 
produce a lot of alternative fuels and technologies, but if we 
proceed with--between 2010 and 2020, the United States alone, 
plus the application of biofuels, provided over 80 percent of 
world increases in demand for liquid fuels. That is the first 
thing we need to think about.
    We should treat this North American production platform as 
a strategic and economic asset. We should be very careful 
before we decide to disrupt it. That is the biggest incentive, 
the biggest program we have to keep gas prices under control.
    The next thing is that we are fighting over a small volume. 
Because in the absence of a mandate, we would still be blending 
anywhere from 8 to 10 percent. Ethanol is a valuable feedstock. 
It helps to meet octane requirements, and other biofuels, but 
if we proceed with a mandate, we kind of prohibit innovation 
and alternatives to come forward. We have no idea what the 
fuels of the future really are going to look like.
    Your final point, this is devastating for low income 
communities, as you can see from that chart. Everyone who wants 
to proceed with these exotic fuels of the future should keep in 
mind that I don't believe the American people will react very 
positively if we go into a period of sustained high gasoline 
prices.
    Senator Capito. Thank you.
    Thank you.
    Senator Carper. All done? OK. All right, thanks so much, 
Senator Capito.
    Senator Cardin was here earlier. He is now joining us, I 
think, by Webex remotely.
    Senator Cardin, if you are there, please proceed with your 
questions. Thanks for joining us.
    Senator Cardin. Well, thank you, Chairman Carper. I 
appreciate this very much.
    This hearing is long overdue. The history of the Renewable 
Fuel Standards is something that needs to be understood, and we 
need to update this, so I very much appreciate your leadership 
on these issues. There are many competing priorities. We have 
energy security issues, we have the environment and our 
concerns for climate change. We have the cost issues, that we 
have just talked about.
    By the way, there are lots of governmental subsidies in 
regard to energy that affect the cost issues, not just here. 
And then the food stock.
    I would like to get the view from our members of the panel 
as to what we can do if we want to focus on development and 
growth of domestic advanced biofuels derived from non-food 
based food stocks. How should we be adjusting our policy in 
regard to renewable fuel standards?
    Mr. Pugliaresi. I think the way to do this is to allow a 
lot of alternative biofuels to compete in the marketplace for 
the liquids market. And for those fuels which have a lot of 
promise and for which we think are substantial public, long 
term public benefits, we should have a good research and 
development program, even some support for, probably, 
deployment.
    But in the end, we should allow a large opportunity for 
consumer choice and for competition to take place between 
manufacturers or processors of fuel to deploy these into the 
marketplace.
    Ms. Skor. I will go ahead, and I will follow on those 
themes of choice and competition, two themes that we 
wholeheartedly support. When it comes to choice, consumers do 
need choices. They need options at the pump. It is very 
unfortunate that come June 1st, one of the lowest carbon, low 
fuel, low cost options available to them is going to be 
eliminated because a few refineries sued and won in court.
    So we have to reintroduce higher blends of biofuel, year 
round access to E15. That is giving consumers one low cost 
choice.
    When it comes to competition, as we all pursue lower carbon 
intense energy, that is very important. Critical to that is 
making sure that the modeling, that the standards, that the 
incentives, the performance standards, are technology neutral. 
In this country, let the best win, right? So, let's make sure 
that we are looking at the full life cycle analysis of all of 
the technologies and all of the available solutions.
    We are going to need everything to be able to achieve these 
ambitious climate goals, so make sure that the modeling 
reflects up to date science, it reflects innovation taking 
place within agriculture to bring down carbon intensity, and 
then I think you are going to have a competitive environment 
with choice for consumers.
    Senator Cardin. I would just mention in that regard, 
Senator Carper and I both serve on the Senate Finance 
Committee. We have looked at proposals to try to have it 
neutral in regards to the tax issues and reward those that are 
lower in carbon emissions and help our environment. We agree 
with that.
    The problem is that today's structure does reward certain 
high carbon sources, and we really don't have a level playing 
field. I don't know if the other panelists want to respond on 
this or not.
    Ms. Wind. Yes, thank you for the question. This is Cory-Ann 
Wind.
    I think this is, what I would say is that, so this is what 
the core of a low carbon fuel standard does, and so it really 
does reward the carbon intensity of that fuel.
    As you mentioned, going from a crop based fuel to a waste 
oil for biodiesel, for example, the fact that they do have 
lower emissions means that they do have higher incentives in a 
low carbon fuel standard. Those higher incentives actually 
bring down the cost of those fuels.
    That is how it is scored in a low carbon fuel standard, and 
I think it has been working really well to incent the lowest of 
the lowest carbon fuels.
    Senator Cardin. That is some of the debate we are having 
now on the price of carbon. If we had a true price of carbon, I 
think we would have a fair competitive standard, giving choice 
to the consumer.
    Thank you, Mr. Chairman.
    Senator Carper. Thank you, Senator Cardin.
    Before we turn to Senator Inhofe, I want to ask unanimous 
consent to submit for the record various materials 
demonstrating recent strong economic growth, including a 
statement from the Assistant Secretary for Economy Policy at 
the Department of the Treasury from January 31st, 2022. 
According to this statement, real GDP grew 5 and a half percent 
over the four quarters of 2021, the fastest annual pace in, get 
this, 37 years. This is in addition to the materials I 
submitted earlier, which show energy prices today are still 
lower than they were in 2007, and today's prices at the pump 
are driven by growth in fuel demand as the economy emerges from 
the pandemic.
    Without objection.
    [The referenced information follows. Due to size 
constraints some documents are not included below but are 
available in Committee files.]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Senator Carper. Next is Senator Inhofe. Senator Inhofe will 
be followed by Senator Whitehouse.
    Senator Inhofe.
    Senator Inhofe. Thank you, Mr. Chairman. Before you start 
my clock, I am going to experiment with something that I 
haven't tried before. I have two questions, but the first 
question has four parts, so rather than put Ms. Johnson in a 
position of having to write down fast, I am going to ask my 
staff to hand her the written copy of those four questions, 
which I will read now.
    First of all, Ms. Johnson, will----
    Senator Carper. The Senator's time has expired.
    [Laughter.]
    Senator Inhofe. I didn't do that to you.
    Senator Carper. All right, go ahead.
    Senator Inhofe. Will denial of the small refinery 
exemptions, of which we have two in Oklahoma, ultimately drive 
gas prices up, and does the data support the assertion that 
small refinery exemptions lower blending and biofuels? Please 
describe your understanding of the EPA's stakeholder engagement 
with refiners regarding the proposed rule. And is there data to 
support the claim that EPA's denial of hardship relief for 
small refineries would contribute to closure of American 
refineries and lost jobs? Anything that has already been 
answered, you can go ahead and run over that fast. All right?
    Ms. Koch. Thank you, Senator Inhofe, and thank you for the 
list of questions.
    With respect to your first question of whether denial of 
small refinery exemptions will drive compliance costs higher 
and gas prices higher, it is a certainty. If EPA publishes its 
proposed denial, the parties holding the RINs that small 
refineries need for compliance will be in a position to demand 
exorbitant prices because small refiners will be captive buyers 
on the eve of the compliance deadlines, multiple compliance 
deadlines on top of one another, because EPA has been so 
delayed in its rulemaking.
    This is assuming that RINs are available at all, so my 
small refineries do not have the RINs that they need for 
compliance. They are physically unavailable. No more 2019s are 
available for compliance; no more 2020s are available for 
compliance because, as EPA described, parties' uncertainty 
about what the ultimate volumes will be are holding onto their 
excess RINs.
    It is a recipe for crushing small refineries. It is a 
recipe for escalating RIN prices. They will get much worse if 
EPA moves forward with its proposal. Gas prices will increase 
with RIN prices for parties that can partially or fully pass 
through their costs; for example, large, integrated oil 
companies and large, exempt retailer chain, and small 
refineries will be forced to violate the law without hardship 
relief, shut down, curtail, or go bankrupt. Those are the 
Department of Energy's predictions.
    With respect to your second question, Senator, does the 
data support the assertion that small refinery exemptions lower 
blending of biofuels, I want to answer that in two parts. First 
of all, EPA's current proposal relates to compliance years 
2019, 2020, and 2021. It is impossible to blend any more fuel 
in those years. Those years have already closed, so no, no 
biofuel blend rate will go down.
    Essentially, the other proof is that, there is a lot of 
discussion about the 2016 to 2018 timeframe when the prior 
Administration granted more hardship relief than it had 
historically. During the period of time when small refinery 
hardship increased, so did the blend rate, and the simple 
reason is small refineries cannot meaningfully impact the blend 
rate. The blend rate, the blending is done downstream. The only 
question is whether or not small refineries are going to make 
massive wealth transfer to the large, integrated oil companies 
and large, exempt blenders that hold the RINs needed for 
compliance.
    Your third question was to describe stakeholder engagement 
with refiners regarding the proposed rule. I can say this: 
Small refiners were blindsided by EPA's proposal to 
retroactively deny all 2019 to 2021 petitions years after their 
statutory deadline to issue their decisions had passed. EPA 
checked a box. They met with us on August 25th of 2021. They 
shared no substance about their plans to issue retroactive mass 
adjudications and denials for small refineries.
    The proposal matches entirely, instead, the asks of the 
biofuel industry, which seems to have had meaningful engagement 
with EPA. EPA also seems to have engaged with the USDA, and by 
the way, you, Congress, decided that the appropriate 
consultation was with the Department of Energy, not Ag, and the 
Department of Energy is, as I have said, has determined that 
EPA's plan to deny hardship relief will result in the shutdown 
and closure of refineries.
    Your last question, Senator, was whether there is data to 
support the claim that EPA's denial would contribute to the 
closure of American refineries and lost jobs. I won't repeat 
what I said previously, but essentially, a number of small 
refineries do not have the RINs they need for compliance. If 
they are denied relief, they will be captive buyers in a market 
with escalating RIN prices.
    EPA has acknowledged that there was a shortcoming in the 
production of RINs for the 2019 compliance year, and that the 
RINs that are available in the market are not in the hands of 
small refineries. Small refineries will necessarily violate the 
Clean Air Act because they will not have the ability to get the 
RINs that they need for compliance, which will then force them 
to decide between spending money on RINs if they have it, 
shutting down, and/or going into bankruptcy.
    Senator, I hope I have answered each of your questions.
    Senator Inhofe. Excellent.
    Senator Carper. And you have done it in just the right 
amount of time. The gentleman's time has expired.
    Go ahead, just briefly. Very briefly.
    Senator Inhofe. I do have one last thing for Mr. 
Pugliaresi, and that is, is there anything, I know you talked 
about this, and you answered a question addressing this also, 
but is there anything in terms of the risks associated with an 
entirely electric fleet that you didn't adequately cover?
    Senator Carper. Just very briefly if you would, please, 
very brief in your response.
    Mr. Pugliaresi. Yes. The biggest problem is, we are energy 
independent now. In order to move to an electric fleet, we have 
to move to a series of critical materials and minerals, on 
which we will be highly dependent. Some of them sourced from 
countries that are not necessarily friendly to the United 
States.
    If I may just correct--one question that I thought was very 
interesting, it is very important to understand that Oregon has 
the fifth highest gasoline prices in the country, so it may be 
lower than some other adjoining States, but gasoline prices are 
quite high in Oregon.
    Senator Carper. All right, thank you.
    Senator Whitehouse, you are up. Thanks very much.
    Senator Whitehouse. Thank you, Chairman, and thanks 
everyone for being here.
    I have long supported the biofuels and ethanol standard, 
but it has kind of been an act of faith that someday the market 
would come around and that corn ethanol, in particular, was 
kind of a pathway effort that would let cellulosic ethanol and 
other forms come forward.
    I am interested, Ms. Wind, in your testimony about the 
carbon intensity of the ethanol and biodiesel that Oregon uses, 
that it has decreased. I am wondering how confident you are in 
the measure of carbon intensity of your corn ethanol fuel 
stock.
    Ms. Wind. Yes, thank you for that question, Senator. We do 
use the Argonne grade model to calculate carbon intensities in 
the State of Oregon, which is the accepted national model to do 
so.
    With respect to the ethanols that we are receiving in 
Oregon, the import of that fuel, it is producer specific, and 
so we can keep very close track of the different ethanols that 
we are getting, even the corn ethanols. What we are seeing is 
incremental decreases in the carbon intensity.
    So, for ethanol over the past 6 years, it has continued to 
incrementally go down, probably about 10 percent. The carbon 
intensity of the biodiesels have had more of a significant 
decrease, but it is steady, and it shows that there is value in 
a low carbon fuel standard to continue to draw down those 
carbon intensities. These facilities are getting more efficient 
and better at their energy inputs, and that is reflected in the 
lower carbon intensity scores.
    Senator Whitehouse. You mentioned cellulosic ethanol, I 
believe. What is the market share within the ethanol market of 
cellulosic ethanol, or in your portfolio, if you know that 
better than the national market?
    Ms. Wind. Yes, thank you for that, Senator. As far as 
cellulosic ethanol, we don't have any cellulosic ethanol coming 
into the State of Oregon. What the ethanol that is coming into 
Oregon, it is not cellulosic, but it is decreasing in carbon 
intensity.
    Senator Whitehouse. Is it? How much of it is corn?
    Ms. Wind. It is 100 percent corn.
    Senator Whitehouse. OK, there we go. One of the things that 
I think we need to do in order to find a pathway to climate 
safety is to put a price on carbon. That seems to be a fairly 
commonly held view among economists and banks and so forth and 
among people who are looking hard at the climate problem for 
emissions reduction solutions.
    At present, the absence of one is a really massive subsidy 
for the fossil fuel industry. The International Monetary Fund 
calculates it north of $600 billion per year, just in the 
United States. Six hundred billion dollars per year is an 
enormous number, and it provides a very strong motive for a 
massive political elections lobbying operation by the protected 
and subsidized fuel to defend and protect its subsidy 
politically. We are in a kind of a difficult position here in 
Congress.
    I am wondering, back to you again, Ms. Wind, if there were 
a price on carbon, how would that affect the ethanol portion of 
your fuel market?
    Ms. Wind. Thank you for that question. In effect, the way 
that the low carbon fuel standard works is that the 
monetization, the value of the fuel, is in the credit prices 
that are being traded in the program. This is a market that we 
do not control. It is a market that contributes to the credit 
prices, the credit center traded within the program.
    Currently speaking, the credits in the State of Oregon are 
trading at about $125 per ton. It has been higher, and it has 
been lower. We publish that on a monthly basis to show 
transparency to the market. There is certainty in what that 
credit price is, that is associated with the carbon. That is 
how we do it in the low carbon fuel standard.
    Senator Whitehouse. My time is up.
    Chairman, thank you very much.
    Senator Capito. Thank you.
    Senator Cramer.
    Senator Cramer. Thank you, Senator Capito. Thanks to all of 
you for being here.
    This is a topic that has perplexed me since the day I got 
to Congress. It is not the topic that perplexes me as much as 
the debate. It never changes. A lot has changed since 2005 and 
2007, when the RFS was created, during a time of scarcity of 
natural resources. Of course, we now have an abundance of 
natural resources.
    In the meantime, we have some other policy decisions. We 
have an Administration right now pushing for up to $12,500 per 
electric vehicle subsidy to change the demand for electric 
vehicles. I am going to just state some facts, and then I am 
going to ask for some feedback.
    We have this debate over this constantly moving target, 
right? Several of us have had this discussion. What I would say 
would be, as a result of lazy legislating, which I am convinced 
is a historical phenomenon in this country, Administrations 
have been given an awful lot of leeway to determine things like 
RVOs, even when they are stated in the law.
    Obviously, the hardship, the small refinery hardship 
waivers are another tool, and then we get upset because, you 
know, for 4 years, it is one way, then for 4 years, it is 
another way, and then for 4 years, it is another way. I know a 
couple of you and I have had this discussion.
    But it seems to me that at the end of this hearing--for the 
last decade, several people I have discussed this with have 
liked to deny that at the end of 2022, there is a new rule in 
place, that the RVOs are no longer in law. They are in law, but 
they are not required, that the authority to set the RVOs--in 
other words, the EPA and the Administration has even more 
unilateral authority after this year.
    I would like to just have a little discussion from the 
panel. What is your understanding, we will start with you, Ms. 
Koch, what is your understanding of the act when the RVOs 
switch over, or the EPA gets carte blanche, in my view, 
authority in 2023 to set the RVOs? Where are going to go if 
nothing happens and they have that authority?
    Ms. Koch. Thank you, Senator. I think that is an excellent 
question, and something that keeps me awake at night.
    I see this freight train heading toward the highest 
possible RVOs to try to break through the blend wall and to 
promote E15. The problem is that EPA had discretion in how to 
set up the program, and it set up the program in such a way 
that it distorted competition.
    Growth Energy has stood shoulder to shoulder with the 
American Petroleum Institute, which represents the large, 
integrated refineries, preventing closing the blender 
loopholes. So essentially, Growth's theory is that just keep 
pushing, just keep pushing, just keep pushing, at some point, 
E15 will happen.
    E15 won't happen before every small refinery is shut down, 
because right now, we are counting on volunteer blending, what 
we call the blender loophole. Small refineries do not have the 
ability to blend. Large, integrated refineries have the ability 
to blend more than they produce.
    Until this market distortion is fixed, it is a recipe for 
destroying those refineries that cannot blend. So if we want to 
keep pushing E15, if we have in fact determined that E15 
results in reductions in greenhouse gas emissions, which is 
something that I don't think we at all agree with, we need to 
fix the structure of the program.
    I was interested in the discussion of cost caps. Very many 
times, limitations on the ability to speculate in the RIN 
market, limitations on the cost of a RIN, obligating blenders, 
all of these proposals to fix the things that are preventing 
renewable fuel blending have not occurred. If we just go 
straight ahead, we are going to just collateral damage our 
industry.
    Senator Cramer. Ms. Skor, first of all, I want you to be 
able to respond to that, but couldn't a future Administration, 
instead of pushing E15, just eliminate, could they go to zero? 
Would that be possible, 1 gallon or something like that, in the 
law?
    Ms. Skor. Senator, thank you for the question. Yes, after 
2023, there are no congressionally set blending requirements, 
so EPA does have greater flexibility in terms of setting the 
blending obligations. A few important things they still have, 
some criteria that they need to consider, job creation, energy 
independence, environmental impact.
    I think one of the things that we have all suffered from, 
in every sector, is the lack of certainty and stability. If 
there is an obligation, it needs to mean something. If there is 
a deadline, it needs to mean something.
    One of the things we look forward to in the set is EPA's 
opportunity to set blending requirements for multiple years in 
advance, similar to what Ms. Wind was talking about in Oregon. 
I think that would help address some of the volatility 
concerns.
    Senator Cramer. Thank you. I wish we had more time.
    Maybe in another round, Mr. Chairman.
    The biggest point that I want to make is that 2022 is here 
now. For 10 years, people looked at me like, don't worry, that 
is in the future. Well, it is not in the future anymore. We 
have to come up with something. I would rather come up with it 
with everyone in the room, if you know what I am saying.
    Senator Carper. As long as it includes us.
    Senator Cramer. As long as you are in the room with me, I 
am good, yes.
    Senator Carper. Thank you, sir. All right. Thanks, Senator 
Cramer.
    Senator Duckworth, I think you are out there on Webex. If 
you are, please proceed.
    Senator Duckworth. No?
    Senator Lummis is here in person, live and in person. We 
will come back to Senator Duckworth when she can rejoin us.
    Senator Lummis, you are recognized. Then, I have Senator 
Stabenow after you by Webex. Go ahead, please. Thanks.
    Senator Lummis. Thank you, Mr. Chairman.
    I would like to begin by asking consent to enter three 
documents into the hearing record. One is an academic study 
published in the Proceedings of the National Academy of Science 
called Environmental Outcomes of the U.S. Renewable Fuel 
Standard. The second is a study by the University of Georgia 
called Analyzing the Downstream Impacts of U.S. Biofuel 
Policies. The third is an article entitled U.S. Bread and Donut 
Makers Urge Biden to Roll Back Biofuel Requirements.
    Senator Carper. Is there objection?
    Hearing none, so ordered.
    [The referenced information follows. One of the documents 
was unavailable for printing but is available in Committee 
files.]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Senator Lummis. Thank you.
    Senator Carper. You are welcome.
    Senator Lummis. Thank you very much. We have already heard 
testimony that the RFS mandate is adding about 28 to 30 cents a 
gallon to the wholesale cost of gas on average, and of course, 
at a time when fuel prices are extremely high and inflation is 
extremely high, it works a hardship on consumers. I believe we 
should look at every avenue to provide relief to consumers.
    When I am in Cheyenne, on the ranch I grew up in, in the 
house I grew up in, I live right next door to a small refinery 
that lost its small refiner exemption. Furthermore, they were 
unable to, when refining for hydrocarbons, they were absolutely 
unable to purchase non-hydrocarbons to blend to meet the 
renewable fuel standards.
    So, they converted the oil refinery to a refinery that now 
refines soybean oil. That refinery in our little town, in the 
State with the smallest population in the Nation, went from 260 
livable wage jobs to 60 livable wage jobs. We lost 200 
employees in Cheyenne, which is a huge number in our little 
community.
    This has had an enormous impact on our community, and this 
happened during the previous Administration's tenure. I didn't 
see them slow walking the loss of the small refiner's 
exemption. I saw them putting the hammer down and costing small 
communities like mine hundreds of jobs.
    Ms. Koch and Mr. Pugliaresi, when Congress created the 
biofuel mandate, we predicted that the program would 
disadvantage small refineries, and of course it has. It 
increasingly precludes refineries from selling the products 
they produce and requires them to buy products they don't 
produce, if they can get them. This squeezes the smallest firms 
first and most severely. Higher cost producers are harmed the 
most and first in time.
    So, is this an effort to just make sure that, much as we 
did with banks, you are too big to fail or too small to 
succeed? In the case of small refiners, are they too small now 
to succeed?
    Mr. Pugliaresi. Senator, we think about the American 
refining complex. We traditionally had a lot of oil production 
produced and processed on the Gulf Coast, and then the products 
moved up the continent. But of course, with the emergence of 
production in North Dakota and the energy independence in the 
U.S., our small refiners and regional became much more 
important. I think they provide a vital role.
    And as I have said, I think the solution remains in order 
for all these different facilities with their different cost 
structures and their different markets to adapt, they need an 
open market, and the fundamental problem they all face is these 
mandated requirements to blend to certain targets, which do not 
necessarily yield any benefits even to the farmers.
    The program is, as I said, we are fighting over very small 
volumes. If we were to open it up and have some broad support 
for moving biofuels forward, we would all be a lot better off. 
These kinds of dislocations would tend to disappear.
    Senator Lummis. Ms. Koch, same question.
    Ms. Koch. Senator, I really appreciate your question. It 
reminds me of something one of my small refineries said to me: 
We dance between the toes of giants. What that means is, the 
smallest refinery in Cheyenne, Wyoming, the smallest refinery 
in Newell, West Virginia, the smallest refinery in whatever 
rural community, from Pennsylvania to California, danced 
between the toes of giant, integrated, multinational oil 
companies until the Renewable Fuel Standard came along and 
said, you know what, we are going to tilt competition in favor 
of the large, integrated oil companies, but don't worry, we 
have got your back.
    Congress said specifically, we recognize that the volume 
mandates and the inability of small refineries to have access 
to capital to become large, integrated oil companies that don't 
have access to pipelines, that disproportionately produce 
diesel fuel, don't have access to blend stocks, don't worry, we 
have got your back. You will be OK. We can provide an 
exemption.
    Small refineries blend every drop of blend stock they 
possibly can, but they don't always have access, and they don't 
always have the ability, so what happens is that they are 
captive buyers in a wildly inflated RIN market. And that is how 
they are harmed.
    I just want to be clear. When we talk about 2019, 2020, and 
2021, where EPA has proposed to deny hardship relief, not one 
more drop of renewable fuel can be blended. So what we are 
talking about is EPA compelling small refineries to make 
massive wealth transfers to large, integrated oil companies 
because they don't have access to feedstock, because they 
cannot blend. It is un-American.
    Senator Lummis. That is, I think, that should be the focus 
of some of the work that we do to have a better Renewable Fuel 
Standard Program, because we are just assuring that only the 
big, integrated companies will succeed, and all of the small 
businesses will fail. They are, once again, moving people out 
of small, rural communities and into the bigger areas that have 
the bigger refineries. It is happening in so many industries 
that it is having a profound effect on America's jobs and 
demographics.
    There has to be a way to encourage renewable fuels at the 
same time that you don't make it all about the small fail and 
the big survive and thrive.
    Thank you, Mr. Chairman. I yield back.
    Senator Carper. Thank you very much for being here, and for 
those questions.
    Senator Duckworth, have you joined us yet on Webex?
    Senator Duckworth. Yes, I have, Mr. Chairman.
    Senator Carper. All right, Senator Duckworth, you are 
recognized, please. Thank you.
    Senator Duckworth. Thank you.
    Ms. Skor, some of the comments made in today's hearing 
demonstrate there is seemingly no end to the list that 
opponents the RFS Program will seek to pin on American 
biofuels. Critics now appear to be blaming biofuels for rising 
retail gas prices, notwithstanding the reality that what 
consumers pay at the pump is largely determined by a, oil 
prices, and b, basic supply and demand.
    Ms. Skor, could you address the claim that RIN prices and 
biofuel production are somehow responsible for increasing 
retail gas prices?
    Ms. Skor. Thank you, Senator, and yes, those are false 
claims. So, the price of the RIN has no bearing on the price of 
fuel at the pump. Those are entirely separate markets. The 
dominant factor driving the price of fuel for consumers at the 
pump is the price of crude oil in addition to supply and 
demand. That is something that is affirmed by our government 
agencies and other modeling.
    What I think what is really important to understand is the 
role of biofuel in bringing down the price of fuel for the 
consumers. The evidence today is the price of E15. Consumers in 
31 States today, they can go up to the pump, and they could put 
in standard 87. That is a 10 percent blend. Some of them could 
choose an 88 octane. That is a 15 percent blend.
    When they have a little bit more ethanol, that actually 
brings the price down. They are saving up to 10 cents per 
gallon. There are also stations where you can buy zero percent 
ethanol. There, you are paying a premium up to 50 cents not to 
have ethanol. So most assuredly, biofuels like ethanol help 
bring down the cost of gas prices.
    Senator Duckworth. Thank you. Ms. Skor, based on how big 
oil describes the burdens of purchasing RINs, it is impressive 
that oil refiners survived the bipartisan enactment of the RFS 
more than 15 years ago. My understanding is that EPA, under the 
last three Administrations, the American Petroleum Institute, 
and numerous individual oil companies are all on public record 
confirming that oil refiners, large and small, recover RIN 
costs downstream and are therefore not irreparably harmed by 
the amount of money they pay to acquire RINs.
    Could you help us understand how, despite the arguments of 
big oil over many years, oil refiners have managed to purchase 
RINs and stay in business?
    Ms. Skor. Thank you for the question. Yes, the RIN affords 
refiners flexibility in terms of how they demonstrate 
compliance with the RFS. They can blend biofuel, like ethanol, 
and they can hand in a RIN, or they can purchase a RIN. So they 
have got the flexibility to be able to do this. And the RFS has 
been in place since 2007. So we have had more than a decade for 
the business to understand their annual obligations and make 
business decisions accordingly.
    Again, important to understand, the RIN marketplace and the 
volatility that you see when you have refiners who are choosing 
not to blend and wait until the eleventh hour, and then seek 
some type of exemption or waiver or extension from the agency, 
I think that is really where you are seeing the volatility come 
into play. But the bottom line is when it comes to consumer 
price at the pump, the more biofuel, the more they are going to 
save.
    Senator Duckworth. Thank you, Ms. Skor.
    Mr. Chairman, I would like to ask unanimous consent to 
enter into the record EPA analyses from 2015, 2017, and 2021 
that confirm what Ms. Skor just explained, along with two 
documents that counter the recent study that has garnered 
attention this week, one from the Renewable Fuels Association 
and another from the National Corn Growers Association 
indicating, among other things, that the USDA found that 
ethanol's carbon intensity was 39 percent lower than gasoline, 
and according to the EPA, the RFS has not expanded cropland; it 
has, in fact, decreased them by increased efficiency on 
existing cropland, not by expanding acreage. And according to 
the USDA, the amount of fertilizer required to produce a bushel 
of corn has fallen dramatically in recent decades since the 
creation of the RFS.
    Senator Carper. Is that your unanimous consent request?
    Senator Duckworth. Yes.
    Senator Carper. Is there objection?
    Hearing none, so ordered. Thank you.
    [The referenced information follows:]
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    Senator Duckworth. Thank you.
    I also ask unanimous consent to include in the record for 
this hearing reports from Environmental Health and Engineering. 
It is a report addressing biofuels and greenhouse gas 
reduction; the Life Cycle Associates 2020 report documenting 
the 1 billion metric tons of GHG reductions attributed to 
biofuel use since 2007.
    Third, a study published by USDA scientists in 2021 titled 
The Greenhouse Gas Benefits of Corn Ethanol: Assessing Recent 
Evidence, which found climate smart agriculture practices 
reduce emissions. And finally, fourth, a study published by 
Argonne National Laboratory that found corn ethanol is reducing 
the carbon footprint and diminishing GHG emissions.
    Senator Carper. Is there objection?
    Hearing none, so ordered.
    [The referenced information follows:]
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    Senator Duckworth. Thank you.
    These studies confirm what we already know: American grown, 
blended biofuels have been reducing GHG emissions for years, 
and the RFS has played an integral part in these efforts.
    I am out of time.
    Thank you, Mr. Chairman.
    Senator Carper. All right. Thank you, thanks so much.
    Senator Ernst, you have been patient, but Senator Stabenow 
has been patient as well on Webex. If you don't mind, I am 
going to let her go first, and then you are immediately right 
after her. Thank you for your patience.
    Senator Stabenow, you are there?
    Senator Stabenow. I am, Mr. Chairman, and thank you to 
Senator Ernst. I appreciate so much working with her on these 
issues. I appreciate very much your doing this hearing.
    I want to take just a step back, way back, for a moment, 
and kind of frame this. I think this has been framed as big 
refiners, small refiners, and so on. This is really about 
whether we are going to continue the dirtiest kind of fuel or 
have cleaner fuels.
    If you go back 100 years, actually, Henry Ford and Thomas 
Edison first tried to do a vehicle with a battery but could not 
get government support to help them create the innovation. Two 
years later, the biggest permanent tax credits for oil and gas 
were embedded in our Federal tax code, and they have been there 
100 years. We, at that time, picked a winner, and they won.
    Now, we are trying to just balance that out with giving 
opportunities to biofuels, electric vehicles, wind, solar, and 
so on, all of which start and stop. It is not a consistent 
policy. It is not embedded in the tax code.
    I want to ask Ms. Skor, when we look at, from a business 
standpoint, the importance of policy and regulatory certainty 
when you are making investment decisions, innovation decisions, 
and so on, how important is that?
    Ms. Skor. Thank you for the question, Senator. That is 
incredibly important. I think there is a very good example in 
terms of, my industry is producing right now cellulosic 
biofuel. That is up to 100 percent and beyond in terms of the 
GHG reductions. But we are not getting credit for it, because 
the technologies have been pending EPA review for over 5 years.
    We as a Nation, we are leaving carbon reductions on the 
table. And then the impact is you have innovators sitting on 
the sidelines because they see a lack of certainty, a lack of a 
marketplace moving forward. Therefore they are going to sit 
this one out.
    It really does stifle the innovation, the investment, that 
we need to continue to bring down the carbon intensity of corn 
ethanol, which we are doing a great job of doing that, and also 
to be able to get our industry to net zero and participating in 
the hard to electrify space. That is a place where we are going 
to be able to perform as a really important feedstock.
    Senator Stabenow. Thank you. Just one more time, for the 
record, are biofuels responsible for high gas prices?
    Ms. Skor. No, quite the opposite. The more biofuels that we 
introduce into the fuel supply, the more we bring down the 
price at the pump for every driver.
    Senator Stabenow. Thank you. It is also jobs, right, in 
rural America and certainly in rural Michigan.
    One of the questions I have to ask as somebody who not only 
is a supporter of biofuels and rural jobs, but also electric 
vehicles being made in my great State, both are important to 
reducing carbon emissions in the transportation sector. I think 
it is important, just for the record, to say that is why the 
United Auto Workers, who make great automobiles and the new 
electric vehicles, strongly support the Renewable Fuel Standard 
as well. In fact, the UAW is the largest private union in Iowa 
with members employed by companies making farm equipment. They 
consistently talk about the fact that they are supportive.
    Ms. Skor, does Growth Energy agree that both electric 
vehicles and biofuels are critical to reducing carbon emissions 
and petroleum use?
    Ms. Skor. Yes. Let me add that we appreciate that UAW 
submitted very strong remarks to EPA in support of a robust 
RFS. We have very ambitious climate goals, and there is no one 
size fits all solution. We are going to need every tool in the 
toolbox, which means biofuels alongside electrification.
    The benefits of biofuels, those are going to be for the 
immediate, the mid, and the long term. In the immediate term, 
we have about 270 million cars on the road today. So biofuels 
allow us to have a solution for those cars, to bring down the 
emissions, to clean up the emissions and do so affordably and 
in an available way for all consumers.
    In the mid to long term, if we are a strong industry today, 
that allows us to have the innovation that we are continuing to 
do to further drive down the carbon intensity of our low carbon 
fuel, but also participate into the hard to electrify space. 
For that, we need accurate carbon modeling, and we need to make 
sure that the incentives provide a fair, level playing field 
for all of the parties who want to be able to compete and 
participate.
    Senator Stabenow. Thank you; I agree.
    Mr. Chairman, I will yield back, and yield to my friend 
from Iowa, Senator Ernst.
    Senator Carper. Senator Ernst, your patience is rewarded. 
Thank you.
    Senator Ernst. Yes, thank you so much. I appreciate that. 
Thank you, Mr. Chair.
    I ask for unanimous consent to submit to the record 
comments from the Renewable Fuels Association and the Clean 
Fuels Alliance.
    Senator Carper. I think we are going to set a record here 
for unanimous consent requests. Without objection, so ordered.
    [The referenced information follows:]
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    Senator Ernst. Outstanding, thank you so much.
    Just to address some of the issues that have been brought 
forward by our witnesses and members of the Committee as well. 
Just looking back at the average closing price of crude oil, in 
2020, it was $39.68 a barrel, and the average closing price in 
2022 so far is $85.72 a barrel. Today, it was $95.46 per barrel 
of crude oil.
    Is that due to the RFS, to our witnesses?
    Emily.
    Ms. Skor. I will go ahead and take that one.
    Absolutely not. The primary factor in terms of the cost of 
fuel at the pump is going to be the cost of crude oil. It has 
nothing to do with the RFS.
    Senator Ernst. Thank you, Ms. Skor. I think a point that 
our members are trying to make today is the cost of fuel is 
because of the RFS. It is not. It is about the price of oil. 
So, I reject that. I hope that our folks out there listening 
are paying attention to that. The price of our fuel is the 
price of the oil.
    We have had the RFS around for a number of years, and the 
reason we have is because Congress asked for the RFS to be 
established so that we could reduce our greenhouse gas 
emissions. The folks across the Midwest, our farmers, our 
producers, responded to the call to Congress. And they 
developed systems that produce clean, reliable energy sources.
    I also reject the premise that oil refineries and their 
rural communities are more important than my rural communities.
    As we are looking to 2023 and beyond, America's farmers and 
the biofuel sector are best positioned to work with this 
Administration and others to put the Renewable Fuel Standard 
back on track and be part of the solution to secure a clean 
energy future. As much as the Biden administration dreams of an 
all electric world, the reality is, liquid fuels are here to 
stay. With 98 percent of cars and trucks today, and nearly 80 
percent of new vehicle sales projected in 2050 running on 
gasoline or flex fuel, biofuel is the key pathway to 
decarbonizing the transportation sector, and the RFS is the 
policy engine that makes this possible.
    Congress passed the Energy Policy Act of 2005 and the 
Energy Independence and Security Act of 2007, which mandated 
the RFS, in part, to help reduce America's dependence on 
foreign nations. Folks, I firmly believe energy security is 
national security. And while President Biden claims to support 
America's clean energy economy, he is turning his back on the 
RFS in favor of electric vehicles, which will only make us more 
dependent on China.
    Science is on our side here, too. Biofuel has enabled the 
U.S. to cut emissions from the transportation sector for over a 
decade. Between 2008 and 2020, the RFS saved nearly 1 billion 
metric tons of carbon dioxide equivalent greenhouse gas 
emissions, and it is only getting cleaner. The latest research 
shows corn ethanol is 46 percent less carbon intensive than 
petroleum based gasoline, and biodiesel is 74 percent less 
carbon intensive than petroleum based diesel.
    Biofuel can further reduce greenhouse gas emissions with 
carbon capture and sequestration technologies and on farm 
conservation practices, which many of our Iowa farmers are 
already doing.
    So let's follow the science and use biofuel as part of a 
clean energy policy, but it is not only the clean energy 
source. Biofuel is also great for our economy and our 
pocketbooks. Iowa corn and soybean farmers had record high crop 
yields in 2021. The biofuel industry accounts for over $5 
billion of GDP, generates $2.6 billion of income for 
households, and supports nearly 46,000 jobs in Iowa alone, in 
my rural areas.
    Ethanol is also the cheapest form of fuel for consumers 
right now, by about 50 cents, and certainly with record high 
inflation, it only makes sense to make this fuel source more 
readily available.
    That is why I continue to urge the Administration, allow 
summertime sales of E15 as soon as possible. It will not only 
support our consumers, it will also support the nearly 300 
retail stations in Iowa who want to provide a cleaner choice at 
the pump.
    Folks, the RFS is the law, and refiners have had over 15 
years to come into compliance. Blend renewable fuels or buy 
RINs. It is your choice. Any claim that RIN prices are 
increasing gas prices, it is a bunch of hogwash. Refiners claim 
they need exemptions because RINs cost them money, but the last 
three Administrations have said RIN prices do not cause harm to 
refiners.
    Small refinery exemptions go against congressional intent, 
and the Supreme Court reinforced this. A strong RFS supports 
rural America and increases consumer access to affordable, home 
grown, clean burning biofuel today, tomorrow, and we also hope, 
for many years to come.
    Thank you. I will yield back.
    Senator Carper. Thanks, Senator Ernst. Thanks for your 
attendance; thanks for your patience, and your questions and 
comments.
    Several members and witnesses asserted that the increase of 
gasoline at the pump is attributable to crude oil prices. So I 
asked my staff, I said, well, let's actually look at the 
numbers. If you go back to February 2021, the price of oil at 
the pump was $62.28. The price today is roughly $94 per barrel. 
That is an increase of about 51 percent. Those are interesting 
numbers.
    I have a couple of questions, and Senator Capito, you may 
have some wrap up questions as well.
    Before we do that, Senator Wicker, Roger is going to try to 
get here. Maybe he is joining us remotely.
    Senator Wicker, are you out there anywhere?
    No, he is not going to be able to come. OK, thanks.
    A couple of questions. The first one that I would like to 
ask, Ms. Wind, with respect to eligible fuels, unlike the 
Renewable Fuel Standard, which requires eligible liquid and 
gaseous fuels and electricity to be derived from renewable 
biomass sources, low carbon fuel standard programs, like 
Oregon's, are generally intended to be both fuel neutral and 
technology neutral. With this in mind, the Oregon Clean Fuel 
Program has a broader definition of transportation fuels than 
the Federal Renewable Fuel Standard.
    My question, Ms. Wind, is how has this broader definition 
of transportation fuels benefited the Oregon program, and how 
has this encouraged investment in producing cleaner fuels in 
your State?
    Ms. Wind. Yes, thank you for that question, Senator Carper.
    That is true. The State of Oregon, with the low carbon fuel 
standard, we do basically value any of the transportation fuels 
that are lower carbon than gas and diesel. So in addition to 
the biofuels and electricity, we also do have renewable natural 
gas. We have propane and renewable propane, and we are going to 
be investing more in hydrogen, as well.
    What we would like to see is that, even with natural gas 
and with propane, that we switch from the fossil versions to 
the renewable version. But even the switch from say, fossil 
gasoline or fossil diesel, there are benefits from the propane 
and the natural gas. If those are the fuels that, because of 
the lower cost of those fuels, are what is leading to more 
infrastructure, more vehicles in the alternative fuel space, 
and then switching to the renewable versions lowers the carbon 
intensities even more, those are the kinds of things that we 
also see in the State of Oregon and will likely continue to see 
as we move into the future for the Oregon Clean Fuels Program.
    Senator Carper. OK, thanks, Ms. Wind.
    I have a follow up question also to Ms. Skor.
    Ms. Skor, with restrictions on what qualifies as an 
advanced fuel under the Renewable Fuel Standard, could a 
technology neutral program, like Oregon's Clean Fuels Program, 
allow more opportunity for your member companies to participate 
in the current structure of the Renewable Fuel Standard?
    Ms. Skor. Thank you for the question.
    Yes, we are a low carbon fuel, so we do very much 
appreciate the concept of a low carbon fuel standard. 
Importantly, as you stated, Senator, making sure that this is 
technology neutral. This is where the carbon modeling comes 
into play. We have to make sure that you are evaluating the 
full life cycle analysis of biofuels like ethanol, that you are 
considering all of the low carbon farming practices that 
continue to bring down the carbon intensity of our fuels.
    If you have a program that is truly technology neutral, 
that reflects the current state of the art science and the 
innovation taking place throughout industry, that allows for 
use of higher biofuel blends, like an E15, that is a place 
where we can play and I think will be able to really help in 
terms of achieving some of our collective low carbon goals.
    I will add that that is a very complementary to the RFS, so 
the two programs work well in tandem. I think Ms. Wind talked 
earlier about that value stack, to continue making sure the 
lowest of the low would go into a market like in Oregon.
    Senator Carper. I have two more quick questions, two more 
quick ones, and then I am going to yield to Senator Capito. We 
have a vote underway as well.
    This is a question for the entire panel. I appreciate the 
perspectives, I think we all do, that our panel has shared with 
us today. I want to compliment our staffs for pulling you all 
together. Thank you for joining us in person and remotely. I 
hope that this dialogue can help inform thoughtful action to 
support the future of this important program.
    With that said, I also recognize the challenges in forging 
a path forward for the Renewable Fuel Standard that satisfies 
everyone and the potential need for compromise and 
collaboration.
    In closing, I just want each of you to take just half a 
minute, if you will, and tell us where you believe there might 
be common ground for all of us on this panel as we deliberate 
this issue going forward, and we will.
    Ms. Skor, would you like to go first?
    Ms. Skor. Certainly, thank you.
    I heard a lot of consensus about the importance of 
competition, about the importance of marketplace certainly, and 
the importance of consumer choice as we make sure that we drive 
toward low carbon fuel options for consumers that are 
affordable and available. This is a place where biofuels really 
have a role to play.
    What we need is a Renewable Fuel Standard that is enforced 
so there is some certainty, and those making business decisions 
throughout the fuel supply chain, including agriculture, 
biofuels, and on the refining side, so we understand what the 
obligations are, and we bring down that volatility.
    We look forward to seeing the EPA fix and finalize the 
blending obligations for 2020 and 2021 and 2022 as 
expeditiously as possible. That kind of certainty is going to 
be something that is going to be good for all parties.
    Senator Carper. Thank you.
    Senator Ernst, do you have one more question?
    Senator Ernst. Thank you, Mr. Chair.
    Just very briefly, because I think I have gotten most of 
the answers for my questions. But I would like, Ms. Skor, 
Emily, would you respond, give a statement or thoughts on the 
anti-ethanol study that was done earlier this week?
    Ms. Skor. I appreciate the comment, thank you. Yes, I am 
familiar with that. It is really very concerning when you look 
at the manipulation of the science and data, the unorthodox 
methodology that leads to really, fictitious and erroneous 
conclusions.
    In short, you have a piece of work that is untethered from 
reality. You look at the totality of science and the consensus 
of EPA, Department of Energy's Argonne National Labs, 
California Air Resources Board, Oregon's Department of 
Environmental Quality, and of course, many academicians and 
scientists. Ethanol is lower carbon than gasoline, and that 
advantage continues to increase.
    Senator Ernst. Thank you, Ms. Skor.
    Thank you, Mr. Chair.
    Senator Carper. Sure.
    Senator Capito has one last question, then I want to ask 
the remainder of my time to go to three of our witnesses, and 
then we will wrap it up.
    Senator Capito.
    Senator Capito. Thank you, Mr. Chairman.
    Yes, I do have to run really quickly after I just make a 
comment or two. It has been a very interesting hearing. I think 
there is consensus that there is a lack of certainty. Maybe 
certainty in different areas that you might share different 
areas that don't have certainty, but you are looking to us to 
provide some of the certainty, so that EPA can move forward.
    In my view, nothing screams lack of certainty than having 
an exemption that is then revoked 2 years later. That, to me, 
is just unconscionable, no matter what it is happening to, if 
it was a corn producer, if it was a refiner, if it is a coal 
miner. Anything, an EV car maker, if you have the OK, and it 
says that you are going to have the permit to move forward, how 
can you possibly conduct business if somebody is going to come 
back 2 years later and revoke it? I think that, to me, is lack 
of certainty.
    I do have the study here that shows, from the University of 
Wisconsin, that U.S. corn based ethanol is worse for the 
climate. I am not going to argue that. I don't know. I think 
that we need to get what is a life cycle, when does it start, 
how long does it go, what kind of emissions are included in 
producing ethanol from corn or growing corn or getting crude 
out of the ground. I think we need to have some consistency 
here and certainty here that we are using the same measurement 
data, because I think it confuses the American public, quite 
frankly, and many of us here who are making those decisions.
    I just want to thank you, Mr. Chairman. I don't really have 
a question. I just thank the witnesses for being here for us, 
and I thought our members asked some really good questions. 
Thank you.
    Senator Carper. Yes, it has been valuable. This Committee, 
as you know, is pretty good at finding the middle in the 
complex, difficult issues, unanimously in some cases. This is a 
hard one. We look forward to working with your team and others 
that are on this Committee trying to find a path forward going 
forward.
    I like to say if it isn't perfect, make it better. This 
situation is not a perfect situation. We have got to do better 
than this. Thank you.
    I am going to go back to our panel again. I would ask a 
question I call a common ground question. I would ask each of 
you to take a minute to let us know where you believe there is 
common ground among all of you. I think only Ms. Skor has the 
opportunity to respond, so let me just ask our other witnesses 
if they would respond, as well.
    Ms. Wind, why don't you go first? Common ground.
    Ms. Wind. Thank you for the question, Senator Carper. I 
think I would, yes, common ground, echo what Ms. Skor and 
Ranking Member Capito have mentioned, uncertainty. It is 
something that we hear quite a bit from the stakeholders that 
participate in the Oregon Clean Fuels Program and in the 
market. Certainty, as far as regulatory certainty, as far as 
the standards being established for our program, that is why we 
are undertaking our current rulemaking now to expand those 
standards out to 2035 to provide that certainty.
    I think along with certainty, transparency in what we do in 
the way that we do our life cycle accounting and the bonding 
and the information that is used to establish those carbon 
intensities, as well as the market aspects of our program, the 
credit pricing and the transactions for that. It is something 
that is the pillar of how we implement the program in Oregon, 
and I think, has served us really well.
    Senator Carper. Thank you, ma'am.
    Mr. Pugliaresi.
    Mr. Pugliaresi. Yes, thank you, Mr. Chairman. I was 
thinking, one of the problems is maybe we should try to do a 
better job of getting a common set of facts.
    Senator Carper. Sometimes that helps.
    Mr. Pugliaresi. Yes, sometimes it helps.
    I think that one of the things I would like to ask the 
Committee to do is, let's have the Energy Information Agency 
publish data for us on what the FOB export price of gasoline is 
and what the wholesale domestic price of gasoline is. Let's 
have them break down the components, because there is a lot of 
discussion of crude oil is causing prices to go up. Of course 
it is, but there are other components in the manufacturing of 
transportation fuels.
    I think if we could get them to do a little more work on 
this, we might get some consensus or a sense of where are the 
hotspots, so to speak, beyond crude oil, that are driving up 
gasoline prices.
    Senator Carper. Good, thank you for that suggestion.
    Ms. Koch, same question.
    Ms. Koch. I think common ground is that small refineries do 
not oppose biofuels, so biofuels that are lower emitting are 
not a problem. Where we depart is on the ability of everybody 
to share in the ability to blend or pay unreasonably high RIN 
prices.
    But I would say that we have commonality in wanting lower 
emitting biofuels. Where we depart on that point also is on 
whether or not ethanol is, in fact, a lower emitting fuel. 
Because as we have been talking about, the recent studies 
suggest that ethanol could be 24 percent higher emitting of 
greenhouse gas emissions than petroleum based fuels.
    To Mr. Pugliaresi's point, information is key. Senator 
Ernst explained that blending is a choice. It is not a choice 
when you don't have access to biofuels. So I think the EIA 
could help us enormously by instead of resisting Freedom of 
Information Act requests related to how much is each refinery 
paying to buy RINs, what is each refinery's actual cost of 
compliance.
    We understand that sufficient RINs are available for 
compliance, but not in the hands necessarily of the people who 
need them for compliance. Whose hands are they in? So more 
forthcoming data would certainly help to dispel, maybe, some of 
the disagreements. I think that that would be important.
    There are substantial barriers to blending, which I agree 
with Ms. Skor, there are. I think we disagree as to what those 
barriers are, but there are substantial barriers. We have to 
have a change to the Renewable Fuel Standard if we want it to 
be sensible, if we want it to not distort competition, and if 
we want to bring down the price of gasoline and diesel.
    Senator Carper. Thank you.
    I have a real quick question for Ms. Skor. I am going to 
ask you to just be very brief in your response, because we have 
a vote underway, and I don't want to miss that vote.
    Ms. Skor, it is my understanding that the previous 
Administration significantly increased the number of small 
refinery waivers it issued compared to the Obama 
administration, including issuing waivers for refineries owned 
by integrated companies like ExxonMobil. Is that your 
understanding?
    Ms. Skor. That is correct, Mr. Chairman. In the previous 
Administration, EPA increased the number of small refinery 
exemptions by a factor of six. That was a sixfold increase. 
Over 80 small refinery exemptions resulted in 4 billion gallons 
of demand destruction, and without any information or 
transparency, in the theme of information, as to how it is that 
they determined that those particular refiners met the very 
narrow threshold that is, you have got to demonstrate 
disproportionate economic harm as a result of RFS compliance.
    We are pleased to see that this EPA is taking a different 
approach and really looking to follow the law and the narrow 
scope of that relief avenue, which is available.
    Senator Carper. Thank you for that response.
    In closing, let me just say, we have had great 
participation here, certainly from the witnesses, but also from 
the members in person and remotely. I am grateful for all of 
that. I am grateful to our staffs for pulling together a great 
panel.
    This is not an easy issue. It is the first time we have had 
a hearing on it in almost 6 years. And it is long overdue. It 
has been helpful for me, and I hope it has been helpful for 
some of my colleagues. We have raised as many issues and 
questions as we have answered, but it is a good start.
    Again, this is one of the hallmarks of this Committee, as 
we work together, and we work across party lines, we try to get 
to yes as often as we can and find consensus.
    I want to thank you all for joining us today. If done 
correctly, renewable fuels help safeguard our Nation's energy 
security, boost economic opportunity for farmers, and reduce 
greenhouse gas emissions. I look forward to continuing our 
conversation and working with members of our Committee, our 
colleagues in the Senate, and other stakeholders to improve the 
Renewable Fuel Standard Program. And as we look to the future 
of the program, I believe we can encourage even greater 
sustainability for the fuels that empower our lives.
    Before we adjourn, some housekeeping. Senators will be 
allowed to submit written questions for the record through the 
close of business on Wednesday, March 2nd.
    We will compile those questions, panel, and we will send 
them to you. We will ask you to respond, if you will, by 
Wednesday, March 16th.
    With that, this hearing is adjourned. Thank you.
    [Whereupon, at 12:02 p.m., the hearing was adjourned.]
    [Additional material submitted for the record follows:]
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