March 8, 2013

Testimony of

David Whikehart

Marathon Petroleum Company LP

For

US EPA’s RFS 2013 Renewable Fuels Standards Proposed Rule

Hello. My name is Dave Whikehart. I am the Director of Product Supply and 

Optimization for Marathon Petroleum Company LP. I am responsible for our 

company’s purchase and distribution of biofuels, including our compliance with 

the Renewable Fuel Standard. Our company has been one of the nation’s largest 

blenders of biofuels for nearly three decades. Through our subsidiaries, we are 

the nation’s fourth largest refiner and produce roughly 10 percent of the nation’s 

gasoline and diesel fuel. Simply put, we are a major obligated party under RFS2.

Speaking as a major obligated party, it is difficult to understand why we are just 

discussing this proposal on March 8 when this rule was required to be finalized by 

November 30 of last year. EPA is effectively proposing to make this rule 

retroactive to the beginning of 2013. Regardless of court rulings, retroactive 

rulemaking is inherently unfair and poor public policy. At a time when obligated 

parties and other market participants involved in the RFS need clear signals, 

proposing a rule nearly one third of the way through the year and finalizing it with 

retroactive application in April or May of this compliance year is unacceptable. 

EPA should withdraw this proposal and begin to work on the 2014 renewable 
fuels standard so it can be proposed in a timely manner and finalized by 

November 30, 2013, so that EPA is in compliance with the Clean Air Act.

2013 is likely to be the year when all of the impracticalities of the RFS2, especially 

the E10 blendwall, start to hit home and it will only get worse in the future. 

Eventually, nearly all provisions of the RFS2 will become unworkable and will 

bring about its demise. The 2013 renewable fuels standards proposal is not only 

very late; it also appears to be poorly constructed. It aggravates rather than helps 

the situation. However, there are steps that EPA can take to mitigate the 2013 

problems and we recommend that EPA focus on addressing these steps 

immediately. In addition to addressing the E10 blendwall, EPA needs to adjust 

the mandated volumes based on the reduced ethanol production experienced in 

2012. The 2012 drought caused the shutdown of many ethanol plants. These 

plants are unlikely to return to full operation until after the 2013 corn crop has 

been harvested and distributed in October of this year.

Concerning cellulosic biofuels, the volume reduction EPA has proposed is not 

sufficient to keep obligated parties from having to purchase credits from EPA for 

fuel that does not exist. There continues to be insufficient quantities of cellulosic 

biofuel to meet the obligated parties’ requirements. EPA continues to rely on the 

forecasts of cellulosic biofuel producers which have been consistently wrong in 

the past. Additionally, EPA repeatedly fails to account for the fact that startup 

operations can be erratic and unpredictable. EPA needs to set the cellulosic 

biofuel renewable fuels standards on an “outcome neutral methodology over an 

aspirational one” as was stated by the D.C. Circuit Court of Appeals in its recent 

opinion. 
In a February 22, 2013 article, EIA revised its 2013 cellulosic biofuel estimate 

downward to 5 million gallons. When EIA reduced this estimate, it acknowledged 

that it has overestimated the actual cellulosic production for every year that the 

RFS has been in place. Given the obvious difficulty and inaccuracy in forecasting 

cellulosic biofuel production, we recommend that EPA set the cellulosic ethanol 

mandate for 2013 at a level consistent with actual cellulosic biofuel production 

for the last 3 months of 2012 and the annual quantity should be pro-rated to 

reflect that the rule will not be final until April or May of this compliance year.

With the E10 blendwall having a significant market impact in 2013, it is imperative 

that EPA exercise its discretion to reduce the total and advanced mandated 

volumes by the same amount as the cellulosic biofuel mandated volumes are 

reduced. There is insufficient production of other US biofuel to make up for the 

cellulosic biofuel shortfall.

We believe that Congress set the total and advanced targets for 2013 assuming 

that the cellulosic target of 1 billion gallons would be met with cellulosic gallons. 

We all agree that 1 billion gallons of cellulosic won’t be present in 2013, so in 

order to keep the total and advanced requirements for non-cellulosic biofuels at 

the levels that Congress envisioned in EISA, the total and the advanced biofuels 

requirements must be reduced by the expected shortfall of cellulosic. Leaving the 

total and advanced at 16.55 and 2.75 billion gallons, respectively, essentially 

raises the requirements for non-cellulosic biofuels above the levels specified by 

Congress in EISA. 

We believe it’s important for EPA to understand the unintended consequences for 

consumers that can occur when RIN prices escalate rapidly due to the 
establishment of unobtainable mandated volumes. These increased costs have a 

direct impact on the US economy. Corn ethanol RINS traded as high as 90 cents 

per RIN yesterday, an increase of 83 cents per RIN since January 3. A 90 cent corn 

ethanol RIN along with the current other RIN prices will increase transportation 

costs borne by US consumers by about $17 billion per year.

On the subject of biomass-based diesel, we believe a 28 percent expansion of the 

2012 biomass-based diesel mandated volume is extremely aggressive. On March 

4, Department of Energy announced the 2012 biodiesel production volumes. The 

industry’s production was on par with the 2011 volumes and below the mandated 

volume for 2012 of one billion gallons. Similar to the cellulosic mandate, the EPA 

is setting the volume requirements at levels that are not in line with historical 

production. This seems contradictory to the recent court ruling that held that EPA 

must set renewable fuel mandate volumes based on reality and not on aspiration.

In addition, EPA will be at least five to six months late in setting the 2014 biomassbased diesel standard. EPA needs to meet its legislated deadlines and it needs to 

establish realistic standards.

Another source of uncertainty is Congress’s reestablishment of the $1.00 per 

gallon biodiesel blending credit could encourage the importation of palm oil as a 

feedstock. Most of this palm oil would use biodiesel production capability but 

would not generate RINs. EPA needs to evaluate not only biomass-based diesel 

production capability but also the biomass-based diesel RIN production capability. 

This added uncertainty further in another reason to keep the biomass-based 

diesel mandated volume for 2013 and 2014 at 1 billion gallons.
And finally, EPA needs to reduce the advanced biofuel 2013 requirement to the 

point where imports of Brazilian sugarcane-based ethanol are no longer required 

for compliance. The sugarcane ethanol exported from Brazil to the US must be 

replaced by US corn ethanol or gasoline imported by Brazil. Swapping US corn 

ethanol for Brazilian sugarcane ethanol to meet an artificial regulatory 

requirement defies logic.

In conclusion, EPA should withdraw this proposal as it is untimely and it will be 

impractical to implement. If the proposal is not withdrawn EPA should:

Set a cellulosic biofuel standard based on the actual production in the last 

three months of 2012 and reduce the annual mandate 40% to reflect that 

the rule will not be final until April or May of the compliance year.

Reduce the Advanced and Total standards by an amount equivalent to the 

cellulosic biofuel standard reduction

Set the biomass-based diesel standard for 2013 and 2014 at 1 billion 

gallons. 

EPA needs to reduce the advanced biofuel 2013 requirements to the point 

where imports of Brazilian sugarcane-based ethanol are no longer required 

for compliance

In 2013 RFS 2 will reach a critical juncture. EPA clearly needs to more fully 

understand and consider the potentially damaging impact of the overall 

program to our struggling economy before mandating the 2013 volumes. 
Renewable fuel volume mandate levels must be established on time based on 

verifiable facts and proven performance rather than grossly inaccurate 

forecasts, unrealistic assumptions, and aspirational goals.