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1!l(!t 20515 The Honorable

Gina McCmthy Administrator U.S. Environmental

Protection

Agency 1200 Pennsylvania

A venue,

NW Washington

, DC 20460 Dear Administrator

McCarthy,

November

4

, 20

1 5 We write

to express significant

concern

with

the recently

propo

se

d 2016 Renewable

Volume Ob

li gations

(RVO)

under

the Renewable

Fue

l Standm·d

(RFS).

The RVO

as currently

proposed would constitute

a breach

of

the ethanol blendwall,

which

would

cause adverse

impacts

on American consumers

and

the economy. Congress

expanded

the RFS when

it passed

the Energy Independence

and Security

Act

of 2007 (EISA).

EISA mandated

an annually increasing

volume

of biofu

el

to

be blended

and consumed in the nation's

motor

fuel supply, reaching

36 billion

gallons

of biofuels

in 2022.

In 2007,

the market assumptions

regarding

the future

of transpmtation

fuels

in the United

States

were

very different

from

the realities

of the market

today.

The Energy Information Administration

(EIA)

at the time projected

motor gasoline

demand

to significantly

ri se through

2022

1

• Since

then,

EIA has revised

its 2007 projection

of motor

gaso

lin

e in 2022 downw

ard

by 27%

and

proj

ec

ts motor gasoline

demand

to continue

to decline tlu·ough

203

5

1

• Increased

fuel efficiency

has

led

to slll'inking

gasoline

demand.

This current

reality, coupled

with an increa

s ing biofuel

blending

level requirement

, has exacerbated

the onset

of

the

E1

0 blendwall

- the point

at wh

ich

the gasoline

supply

is

sat

u rated

with

the maximum

amount

of ethanol

that

the cunent

vehicle

fleet, marine

and other

small engines

, and refueling infrastructure can safely accommodate

. We agree

with

the EPA's conclusion

in

its first RVO proposal

for

20

14 and

in

its current proposal

for 2014,

2015,

and

20

16 that

the

E lO blendwall

is

a binding constraint. We

are grave

l y concerned,

how ever,

that despite

the Agency

's

r ecognition

of the blend

wall,

the 2016 proposal

acknow

led ges

that

it will

be breached nonetheless.

Specifically

, EPA

states

that the 2016

RVO "includes

volumes

of renewable

fuel

that

will require

either ethanol

use

at

le vels significantly

beyond

the

le ve

l of the

E 10 blend

wall,

or sign

ifi cant

l y greater

use

of non-ethanol renewable

fuels than has

occurred

to date.

"

2 1 Ene

rgy Information

Admin

i s tration

, Annual

Energy

Outlook 2007-2015,

Reference

Case Table

11 2 Federal

Regi

s

t e

r

, Vol.

80,

No.

111

, Wedne

sday

, June

10,

2 015, Proposed

Rules (p.33102)

, EPA Renewable

Fuel S tandard Program:

Standards

for 2014,

2015,

and 2016

and Biomas

s- Based

Diesel Vo/wnefor

2017; Proposed Rule

PAINTED

O

N

R ECYCLED

PAPERTheHonorableGinaMcCmihyPage2MultiplestudieshaveshowndetrimentaleconomicharmmaybecausedbybreachingtheE10blendwall.A2014reportontheRFSbythenonpmiisanCongressionalBudgetOfficeconcludedthatrequiringthevolumesofbiofuelinEISA,whichwouldbreachtheblendwall,couldincreasethepriceofElOgasolinebyupto26centspergallon3.NERAconcludesinaJuly27,2015studythat"highergasolinepricesleaveconsumerswithlessdisposableincome4",furtherhinderingeconomicgrowth.AnRFSstudybyCharlesRiverAssociatesconcurs:"Theresult[ofexceedingtheblendwall]willbelimitedavailability,higherconsumercosts,andfewersalesofconventionaltransportationfuels5."ThisadverseeconomicharmfallshardestonAmerica'slowerincome·families.EPAacknowledgesthatits2016RVOproposalwouldrequiresignificantgreateruseofE15andE85inordertomeettheproposedmandatein2016.Therefore,thisproposalisproblematicnotonly"inprinciple,butitisalsoimpracticalsinceitwouldtakedecades,notmonths,tobuildoutthecompatiblevehiclefleetandinstallthenecessm·yretailinfrastructuretoaccommodatethehigherblendsofethanol.AAAcalculatesthatonly5%ofthevehiclesontheroadm·eapprovedtouseE156andtheEIAcalculatesthatonly6%ofvehiclescanuseE857.Therefuelingretailinfi·astructureisevenmorelimitedwithonly2%ofretailstationssellingE858andonly100stationsnationwidesellingE159.CongresswillcontinueitsworktowardabipmiisansolutiontodealwiththeRFS.Asthisworkcontinues,itiscriticalthatEPAuseitsstatutoryauthoritytowaiveEISA'sconventionalbiofuelvolumetokeeptheblendingrequirementsbelowtheE10blendwall,andtohelplimittheeconomicandconsumerhmmthisprogramhasalreadycaused.BillFloresMemberofCongressostaMemberofCongressSincerely,PeterWelchMemberofCongressSteveWomackMemberofCongressBobGoodlatteMemberofCongress3CongressionalBudgetOffice,TheRenewableFuelStandard:Issuesfor2014andBeyond(June2014)4NERAEconomicConsulting,EconomicImpactsResultingfromImplementationofRFS2Program(July2015)5CharlesRiverAssociates,ImpactoftheBlendWallConstraintinComplyingwiththeRenewableFuelStandard(November2011)6AmericanAutomobileAssociation,PressRelease"NewEl5GasolineMayDamageVehiclesandCauseConsumerConfusion"(December2012)7EnergyInformationAdministration,AnnualEnergyOutlook20148FuelsInstitute,E85:AMarketPe1jormanceAnalysisandForecast(2014)9RenewableFuelsAssociationdata(www.ethanolrfa.org)The Honorab

l e G

ina McCa1thy Page

3

**~o1.v**

6+attO **~l3~**The Honorable

Gina McCarthy Pagc4

**~.74t; ~~** .TheHonorableGinaMcCarthyPage5.dJ--d_'Kotr¢f-TheHonorableGinaMcCarthyPage6j;.t\JJ--'L.OJiniwLJTheHonorableGinaMcCarthyPage7lllcSJ9.4-----...1(.J:u{AR-J.)TheHonorableGinaMcCarthyPage8NY-otTheHonorableGinaMcCarthyPage9;J:_\TheHonorableGinaMcCarthyPage10U.-juPt)JaMdi-'i·i+TheHonorableGinaMcCarthyPage11)fJM,c'B.frr;:__0••)II,_/......c."-•tvyvv[aTheHonorableGinaMcCarthyPage12.-cTheHonorableGinaMcCarthyPage13Page3JeffDuncanRyanZinkeLouBarlettaBillPoseyBradleyByrneRobBishopGlennThompsonRobertHurtSteveRussellBruceWestermanTomPriceMichaelT.McCaulJoeHeckGarretGravesGaryPalmerJoaquinCastroJimBridenstineMiaB.LovePage4RobertJ.DoldTomRiceRobertPittengerBarbaraComstockDennisA.RossCharlesJ."Chuck"FleischmannRobertAderholtCedricRichmondMimiWaltersBarryLoudermilkKevinBradyGreggHarperThomasMassieBrianBabinWillHurdRichardHannaDougLaMalfaRonDeSantisPage5RyanCostelloDavidP.RoeDennyHeckPeterKingDavidRouzerJeffMillerJosephR.PittsMarkE.AmodeiScottRigel!DaveBratMarcA.VeaseyFrankGuintaScottDesJarlaisJohnRatcliffeDavidB.McKinleyChrisStewartDavidSchweikertStevenM.PalazzoPage6DanBenishekMarioDiaz-BalartRickAllenFilemonVelaTedYohoMikePompeoRandyK.Weber,Sr.PatrickMeehanGeorgeHoldingEarlL."Buddy"CarterTomMacArthurRichardHudsonPaulGosarMikeBishopEvanJenkinsDavidValadaoGlennGrothmanDevinNunesPage7LoisFrankelBlakeFarentholdKayGrangerSteveKnightJamieHerreraH.MorganGriffithBeutlerMarthaMeSallyDianeBlackJohnKatkoMarkwayneMullinReneeEllmersAlexanderX.MooneyMoBrooksFrenchHillPaulCookChrisCollinsKeithRothfusScottPerryPage8ChristopherP.DanNewhouseGibsonBillyLongRaulR.LabradorAndyHarrisMikeKellyJimJordanLeeZeldinJodyHiceDougCollinsAndyBarrCharlesW.Boustany,Jr.CarlosCurbeloTrentKellyRandyK.TreyGowdyNeugebauerRogerWilliamsBradleyWenstrupTheHonorableGinaMcCarthyPage14Page9EricA."Rick"PeterDeFazioCrawfordRobWoodallAnderCrenshawRichardNugentJohnFlemingJoeBartonGreggWaldenJohnCarterDavidW.JollyGusM.BilirakisChelliePingreePeteOlsonJohnMicaMarkSanfordLynnWestmorelandJohnJ.Duncan,Jr.MacThornberryPage10HenryCuellarDarrellE.lssaCharlesW.DentDanaRohrabacherJebHensarlingSamJohnsonJoeWilsonEdwardR.RoyceScottGarrettMichaelK.SimpsonPeteSessionsKennyMarchantLouieGohmertRubenHinojosaMarshaBlackburnG.K.ButterfieldBillShusterRodneyP.FrelinghuysenPage11DonYoungTomMcClintockSteveScaliseMichaelC.BurgessWalterB.JonesMattSalmonVirginiaFoxxLeonardLanceSteveChabotJohnAbneyCulbersonChristopherH.DougLambornSmithLamarSmithTedPoeAustinScottMickMulvaneyFrankA.LoBiondoTimMurphyPage12DuncanHunterKurtSchraderStevanPearceCynthiaLummisTrentFranksTimWalbergTomReedTomGravesMikeCoffmanBenRayLujanF.JamesTomColeSensenbrennerStephenFincherGeneGreenRobertJ.WittmanK.MichaelConawayBrucePoliquin