OVERVIEW OF THE RENEWABLE FUEL STANDARD: 

STAKEHOLDER PERSPECTIVES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

JULY 23 & 24, 2013 

Serial No. 113–73 

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OVERVIEW OF THE RENEWABLE FUEL STANDARD: 

STAKEHOLDER PERSPECTIVES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

JULY 23 & 24, 2013 

Serial No. 113–73 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

(II) 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

RALPH M. HALL, Texas 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Missouri 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

PAUL TONKO, New York 

(III) 

SUBCOMMITTEE ON ENERGY AND POWER

ED WHITFIELD, Kentucky 

Chairman 

STEVE SCALISE, Louisiana 

Vice Chairman 

RALPH M. HALL, Texas 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

LEE TERRY, Nebraska 

MICHAEL C. BURGESS, Texas 

ROBERT E. LATTA, Ohio 

BILL CASSIDY, Louisiana 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

BOBBY L. RUSH, Illinois 

Ranking Member 

JERRY MCNERNEY, California 

PAUL TONKO, New York 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN D. DINGELL, Michigan 

HENRY A. WAXMAN, California (ex officio) 

(V) 

C O N T E N T S 

JULY 23, 2013 

Page 

Hon. Ed Whitfield, a Representative in Congress from the Commonwealth 

of Kentucky, opening statement ......................................................................... 1 

Prepared statement .......................................................................................... 2 

Hon. Bobby L. Rush, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 3 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 4 

Prepared statement .......................................................................................... 5 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 6 

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, prepared statement ...................................................................................... 205 

WITNESSES

Jack N. Gerard, President and CEO, American Petroleum Institute ................. 8 

Prepared statement .......................................................................................... 10 

Bob Dinneen, President and CEO, Renewable Fuels Association ....................... 13 

Prepared statement .......................................................................................... 15 

Charles T. Drevna, President, American Fuel & Petrochemical Manufacturers .......................................................................................................................... 29 

Prepared statement .......................................................................................... 31 

Michael McAdams, President, Advanced Biofuels Association ............................ 59 

Prepared statement .......................................................................................... 61 

Answers to submitted questions ...................................................................... 206 

Jeremy I. Martin, Senior Scientist, Clean Vehicles Program, Union of Concerned Scientists .................................................................................................. 67 

Prepared statement .......................................................................................... 69 

Answers to submitted questions ...................................................................... 209 

Tom Buis, CEO, Growth Energy ............................................................................ 120 

Prepared statement .......................................................................................... 123 

Joseph H. Petrowski, CEO, The Cumberland Gulf Group, On Behalf of Society 

of Independent Gasoline Marketers of America and National Association 

of Convenience Stores .......................................................................................... 143 

Prepared statement .......................................................................................... 145 

Shane Karr, Vice President, Federal Government Affairs, The Alliance of 

Automobile Manufacturers .................................................................................. 154 

Prepared statement .......................................................................................... 156 

Todd J. Teske, Chairman and CEO, Briggs & Stratton Corporation .................. 164 

Prepared statement .......................................................................................... 166 

Robert Darbelnet, President and CEO, AAA ......................................................... 174 

Prepared statement .......................................................................................... 176 

Joe Jobe, CEO, National Biodiesel Board .............................................................. 184 

Prepared statement .......................................................................................... 186 

JULY 24, 2013 

WITNESSES

Pam Johnson, President, National Corn Growers Association ............................ 218 

Prepared statement .......................................................................................... 220 

Bill Roenigk, Senior Vice President, National Chicken Council .......................... 233 

Prepared statement .......................................................................................... 235 

Page

VI 

Ed Anderson, CEO, Wen-Gap, LLC, On Behalf of National Council of Chain 

Restaurants .......................................................................................................... 239 

Prepared statement .......................................................................................... 241 

Chris Hurt, Professor, Department of Agricultural Economics, Purdue University ......................................................................................................................... 245 

Prepared statement .......................................................................................... 247 

Scott Faber, Vice President of Government Affairs, Environmental Working 

Group .................................................................................................................... 262 

Prepared statement .......................................................................................... 264 

SUBMITTED MATERIAL

Article entitled, ‘‘Ethanol Fails to Lower Gas Prices, Study Finds,’’ in Scientific American, dated July 18, 2012, submitted by Mr. Matheson ............... 289 

Letter of July 22, 2013, from the American Motorcycle Association to the 

subcommittee, submitted by Mr. Whitfield ........................................................ 294 

Letters of support from various Oregon organizations, submitted by Mr. 

Whitfield ............................................................................................................... 298 

Letter of July 23, 2013, from the American Cleaning Institute to the subcommittee, submitted by Mr. Whitfield ............................................................. 311 

Statement of Biotechnology Industry Organization, submitted by Mr. 

Whitfield ............................................................................................................... 312 

Statement of the Iowa Cattlemen’s Association, submitted by Mr. Braley ........ 315 

(1) 

OVERVIEW OF THE RENEWABLE FUEL 

STANDARD: STAKEHOLDER PERSPECTIVES, 

DAY 1 

TUESDAY, JULY 23, 2013 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY AND POWER, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 9:45 a.m., in room 

2123, Rayburn House Office Building, Hon. Ed Whitfield (chairman 

of the subcommittee) presiding. 

Present: Representatives Whitfield, Scalise, Hall, Shimkus, Pitts, 

Terry, Burgess, Latta, Cassidy, Olson, McKinley, Gardner, Pompeo, 

Kinzinger, Griffith, Barton, Upton (ex officio), Rush, McNerney, 

Tonko, Engel, Green, Capps, Barrow, Christensen, Castor, and 

Waxman (ex officio). 

Staff Present: Nick Abraham, Legislative Clerk; Charlotte Baker, 

Press Secretary; Sean Bonyun, Communications Director; Matt, 

Bravo, Professional Staff Member; Allison Busbee, Policy Coordinator, Energy and Power; Tom Hassenboehler, Chief Counsel, Energy and Power; Ben Lieberman, Counsel, Energy and Power; 

Brandon Mooney, Professional Staff Member; Andrew Powaleny, 

Deputy Press Secretary; Chris Sarley, Policy Coordinator, Environment and Economy; Phil Barnett, Minority Staff Director; Patrick 

Donovan, Minority FCC Detailee; Kristina Friedman, Minority 

EPA Detailee; Bruce Ho, Minority Counsel; Ryan Skukowski, Minority Staff Assistant; and Alexandra Teitz, Minority Senior Counsel, Environment and Energy. 

OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF KENTUCKY 

Mr. WHITFIELD. The hearing will come to order. I will recognize 

myself for a 5-minute opening statement. 

Today we have our second hearing entitled, ‘‘Overview of the Renewable Fuel Standard: Stakeholder Perspectives,’’ and we continue our assessment of the Renewable Fuel Standard. Over the 

course of this year, we have taken a comprehensive and deliberate 

approach working with both staffs on both sides of the aisle and 

members on both sides of the aisle to review the RFS, beginning 

with a series of bipartisan white papers that solicited input from 

interested stakeholders on major aspects of the program. The response has really been overwhelmingly helpful to the process, and 

2 

I certainly want to thank everyone for participating and helping us 

deal with this issue. 

Our first hearing on the subject was on June 26. We focused at 

that time on the government agencies chiefly responsible for implementing the RFS. EPA, EIA, and USDA all agree that many things 

have changed since the RFS was last revised in 2007. For example, 

as you all know, we are using a lot less gasoline today than we did 

then, yet the RFS is still based on the assumptions of 2007 and not 

the realities of 2013. We know that the RIN prices are going up. 

We know that cellulosic ethanol production is simply not there at 

this time. And all three agencies at that hearing on the 26th of 

June agreed that there were RFS implementation issues that warranted attention, especially as we look to 2014. And we certainly 

need to pay attention to those issues. 

Today and tomorrow, we take another important step in the review process by hearing from 16 stakeholder witnesses offering a 

wide range of perspectives on the RFS. Refiners, renewable fuel 

producers, environmentalists, automakers, small engine makers, 

fuel retailers, corn growers, poultry raisers, restaurant owners, consumers, and others will all explain where we are today with the 

RFS. And we expect that after the hearing today, everyone will be 

on the same page. 

I am pleased to welcome as a part of our second panel today 

Todd Teske of Briggs & Stratton. That plant manufactures small 

engines, not only in my district in Kentucky but throughout the 

country. 

Today’s first panel is going to focus on the impact of the RFS on 

fuel production, while the second will focus on fuel sales and use. 

And then we are having another hearing tomorrow and that panel 

will address the impacts on the agricultural sector and the food 

supply. 

Despite the differing points of views from which stakeholders 

come to this issue, it is my hope that with today’s hearing, we can 

at least start the process of consensus building on a path forward 

for the RFS. This includes potential adjustments to the RFS that 

align the program with current energy realities. Many businesses 

and many jobs are at stake from corn farmer to refinery worker to 

gas station employee to lawnmower maker to ethanol plant worker. 

And just as important, the interests of consumers are directly impacted by the RFS. The end goal of this process is an RFS that 

works effectively and does not distort the market. And with that, 

at this time, I would like to recognize the gentleman from Illinois 

Mr. Rush for a 5-minute opening statement. 

[The prepared statement of Mr. Whitfield follows:] 

PREPARED STATEMENT OF HON. ED WHITFIELD

This morning’s hearing is entitled ‘‘Overview of the Renewable Fuel Standard: 

Stakeholder Perspectives,’’ and continues our committee’s assessment of the RFS. 

Over the course of this year, we have taken a comprehensive and deliberate approach to reviewing the RFS, which began with a series of bipartisan white papers 

that solicited input from interested stakeholders on major aspects of the program. 

The response has been overwhelming and very helpful to the process, and I would 

like to thank everyone who participated. 

We conducted our initial hearing on June 26, which focused on the government 

agencies chiefly responsible for implementing the RFS. The EPA, EIA, and USDA 

3 

all agreed that many things have changed since the RFS was last revised in 2007. 

For example, we are using considerably less gasoline today than we did then. Yet 

the RFS is still based on the assumptions of 2007 and not the realities of 2013. 

And all three agencies agreed that there are RFS implementation issues that warrant serious attention, especially as we look to 2014. We need to pay attention to 

these warnings. 

Today and tomorrow, we take another important step in the review process by 

hearing from 16 stakeholder witnesses offering a wide range of perspectives on the 

RFS. Refiners, renewable fuel producers, environmentalists, automakers, small engine makers, fuel retailers, corn growers, poultry raisers, restaurant owners, consumers, and others will all explain where we are today with the RFS and what the 

future may hold. 

And I am pleased to welcome, as part of the second panel, Todd Teske of Briggs 

& Stratton which manufactures small engines back in my district. 

Today’s first panel will focus on the impact of the RFS on fuel production, while 

the second will focus on fuel sales and use. And tomorrow’s panel will address the 

impact on the agricultural sector and the food supply. 

Despite the differing points of view from which stakeholders come to this issue, 

it is my hope that with today’s hearing we can start a process of consensus building 

on a path forward for the RFS. This includes potential adjustments to the RFS that 

align the program with current energy realities. 

Many businesses and many jobs are at stake—from corn farmer to refinery worker to gas station employee to lawnmower maker to ethanol plant worker. And, just 

as important, the interests of consumers are directly impacted by the RFS. The end 

goal of this process is an RFS that works as best as possible for everyone. 

# # # 

OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. RUSH. I want to thank you, Mr. Chairman, for holding this 

timely and important hearing on the overview of the Renewable 

Fuel Standard, where we will have the opportunity to hear from 

various stakeholders representing many different sectors of the 

economy. Over the course of the past year, my office has attended 

dozens of meetings on this critical topic. And for stakeholders from 

my home State of Illinois, there are few energy issues as important 

as the matter of the RFS. 

Mr. Chairman, I have always been very supportive of this policy 

because I believe since its inception, it has achieved many of the 

goals that it was first enacted to do, including helping to reduce 

U.S. dependency on foreign oil, enhancing energy security, bolstering the agriculture economy, and addressing the challenges of 

climate change by reducing greenhouse gas emissions from the 

transportation sector. Today I believe the RFS has been successful 

in meeting each of these standards while also helping to drive job 

creation and economic investment. 

For instance, Mr. Chairman, the RFS has played a key role in 

helping America’s ethanol industry support 400,000 jobs nationwide, including 64,000 jobs in Illinois alone. And it has also resulted in over $40 billion in economic activity. Additionally, as the 

summer driving season reaches its peak and gas prices skyrocket 

at the pump, Chicagoans are paying among the highest prices in 

the country, averaging $4.11 for regular gas last week, which is up 

from $3.84 just a week before that. So, one of the questions I would 

like to learn today more about, Mr. Chairman, is, how does diversifying the Nation’s fuel sources, as the RFS does, impact gasoline 

prices for consumers? I also look forward to having the various 

4 

stakeholders discuss some of the important issues surrounding the 

RFS in a public and transparent setting where they will have the 

opportunity to respond and rebut other witnesses so that the members of this subcommittee may gain a better idea of what is, indeed, fact and what is just mere fiction in regards to this debate. 

Mr. Chairman, in meeting after meeting, my office has received 

a host of competing and, in many instances, contrasting information on the RFS, especially in the areas of the gasoline ethanol 

blend wall, the rate of advanced biofuels development, issues associated with the renewable identification numbers, and the impact 

of the RFS on agriculture and food prices. 

So I am pleased, Mr. Chairman, with the diversity of the panelists and the different industry sectors they represent because I believe this will help lead them to a robust and comprehensive debate. And hopefully, it will help members on both sides of the aisle 

come to a sensible resolution of this very, very important issue. 

Mr. Chairman, I look forward to the public hearing today, the 

one tomorrow where we can lay out all of the facts, including both 

the opportunity and the challenges to implementing the RFS as 

currently drafted. And it is my hope that we can work to find bipartisan common ground on this issue as it moves forward. I want 

to thank you, and I yield back the balance of my time. 

Mr. WHITFIELD. Thank you Mr. Rush. 

At this time, I recognize the gentleman from Michigan, Mr. 

Upton, chairman of the full committee for a 5-minute opening 

statement. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. Thank you, Mr. Chairman. As authorizers, it is our 

job to review the policies that we establish overseas. And it is a job 

that certainly I take very seriously as chairman of this committee, 

as do our members on both sides of the aisle. And since this is the 

committee where the RFS originated, we have the responsibility to 

assess how it is working and if it can be improved. And today’s 

hearing continues our bipartisan review of the RFS. And I want to 

thank Ranking Member Waxman for his collaboration in this process. 

Much has changed since the RFS was last revised in 2007, including the exciting new developments that have led to unexpected 

increases in domestic oil and natural gas production. And while I 

believe this committee should do all it can to facilitate the domestic 

gas and natural oil revolution, I also see a continued role for renewable fuels and other alternatives. Reviewing the RFS and how 

it fits into the changing energy mix is what we are doing today. 

We began our assessment with a series of bipartisan white papers that explored key RFS topics, including the compatibility of 

fuels with the existing infrastructure and vehicle fleet and the impacts on the agriculture sector and the environment. The stakeholder response has been as extensive as it has been substantive. 

And the range of viewpoints expressed demonstrates the far-reaching effects of the RFS. On June 26, this subcommittee held its first 

RFS hearing and invited the Federal agencies most directly responsible for implementing the RFS. The Energy Information AdminisVerDate Nov 24 2008 12:30 Aug 05, 2014 Jkt 037690 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-73 CHRIS
5 

tration, the EPA, and the Department of Ag all made similar diagnoses, that there are real issues with RFS that may come to the 

surface in 2014. In other words, our review is very timely. 

Today we invite stakeholders to continue that discussion. I welcome all of it. And of course, I am particularly interested in hearing from the automakers, knowing its importance to the Midwest 

and my State of Michigan. Fuels and vehicles operate as a system, 

and we need an RFS that works well within that system, given the 

changing dynamics of the current CAFE compliance obligations. 

But let me cut to the chase. In my view, the current system cannot stand. I hope that we can start a discussion that considers a 

host of potential modification and updates to the RFS with the end 

goal being a system that works best for the American people. And 

to do that, we need everyone, everyone to come to the table with 

a commitment to listen and be constructive. I welcome every proposal, all proposals to improve this system and look forward to 

hearing those ideas from today’s witnesses. 

I am especially looking forward to hearing what each stakeholder 

is willing to bring to the table to fix and improve the current system. I am absolutely committed to ensuring that we deliver workable reforms. 

I yield back to the chairman. 

[The prepared statement of Mr. Upton follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

As authorizers, it is our job to review the policies we establish and oversee. It’s 

a job I take very seriously as chairman of this committee, as do our members on 

both sides of the aisle. And since this is the committee where the Renewable Fuel 

Standard originated, we have the responsibility to assess how it is working and if 

it can be improved. Today’s hearing continues our bipartisan review of the RFS, and 

I would like to thank ranking member Waxman for his collaboration in this process. 

Much has changed since the RFS was last revised in 2007, including the exciting 

new developments that have led to unexpected increases in domestic oil and natural 

gas production. And while I believe this committee should do all it can to facilitate 

this domestic oil and natural gas revolution, I also see a continued role for renewable fuels and other alternatives. Reviewing the RFS and how it fits into the changing energy mix is what we are doing today. 

We began our assessment with a series of bipartisan white papers that explored 

key RFS topics, including the compatibility of fuels with the existing infrastructure 

and vehicle fleet, and the impacts on the agricultural sector and the environment. 

The stakeholder response has been as extensive as it has been substantive. And the 

range of viewpoints expressed demonstrates the far-reaching effects of the RFS. 

On June 26th, this subcommittee held its first RFS hearing, and invited the federal agencies most directly responsible for implementing the RFS. The Energy Information Administration, Environmental Protection Agency, and Department of Agriculture all made a similar diagnosis—that there are some real issues with the RFS 

that may come to the surface in 2014. In other words, our review is timely. 

Today, we invite stakeholders to continue the discussion. I welcome all of them, 

and of course am particularly interested in hearing from the automakers. Fuels and 

vehicles operate as a system, and we need an RFS that works well within that system, given the changing dynamics of the current CAFE compliance obligations. 

In my view, the current system cannot stand. I hope we can start a discussion 

that considers a host of potential modifications and updates to the RFS, with the 

end goal being a system that works best for the American people. To do that, we 

need everyone to come to the table with a commitment to listen and to be constructive. I welcome all proposals to improve the system and look forward to hearing 

ideas from today’s witnesses. I am especially looking forward to hearing what each 

stakeholder is willing to bring to the table to fix the current system. I am absolutely 

committed to ensuring we deliver workable reforms. 

6 

# # # 

Mr. WHITFIELD. The gentleman yields back. 

At this time, I recognize the gentleman from California, Mr. 

Waxman, for a 5-minute opening statement. 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you, Mr. Chairman. 

Last year, Americans consumed our lowest amount of oil since 

1996. 

This is good news for the climate and for families’ pocketbooks. 

We are relying less on fossil fuels and are using those fuels more 

efficiently. Thanks to President Obama, we have vehicle standards 

that will continue to make our cars and trucks more efficient and 

less carbon polluting than ever before. 

These standards are saving Americans money at the pump, enhancing our energy security, boosting our economy, and cutting 

carbon pollution. 

Yet as long as our transportation system relies almost entirely 

on fossil fuels, we will continue to pollute and drive dangerous climate change. Transportation is the second largest source of carbon 

pollution in the U.S. Further improvements in fuel efficiency are 

critical but will not achieve the 80 percent reduction in climate pollution that we need by 2050 to avoid catastrophic climate change. 

In my district, scientists at UCLA recently predicted that if we 

fail to reduce carbon pollution, southern California snow packs will 

fall 42 percent by mid century and by more than two-thirds by the 

end of the century. This is an impending crisis for the 18 million 

Californians who rely on the snow melt for drinking water, agriculture, and other economic activities. And with our interconnected 

economy, even these effects aren’t limited to California. Reduced 

production on California farms introduces uncertainty into our food 

supply and means we will pay more for our fruits and vegetables. 

In recent years, we have seen historic droughts, fires, floods, heat 

waves, and hurricanes. Climate change is hurting Americans 

across the country. 

As President Obama recently emphasized, we must build a 21st 

century transportation system to address climate change. There are 

several ways that we can reduce carbon pollution in the transportation system. Fuel efficiency is one, but so are better land use 

planning and investments in public transportation options that 

lower costs and protect the environment. Hybrid vehicles and electric vehicles charged with electricity from renewable sources are 

also key parts of the solution. 

In today’s hearing, we will look at another: low carbon biofuel, 

which are being developed under the Renewable Fuel Standard, or 

RFS. For some transportation sectors, including aviation and shipping, low carbon liquid fuels may be the only option to reduce carbon pollution besides efficiency. However, as we will also explore 

today, not all biofuels are low carbon, and our biofuels policy must 

be implemented thoughtfully to achieve climate benefits. 

7 

Today’s hearing is the subcommittee’s second look at the RFS, 

which is one of the few laws adopted by Congress that explicitly 

and directly aims to reduce carbon pollution. 

Last month, we heard from EIA, EPA, and the Department of 

Agriculture that the RFS has helped launch an entirely new advanced biofuels industry that has the potential to offer real climate 

benefits and grow our economy. But we also heard that development of this industry has taken longer than Congress had originally hoped and that other challenges have arisen, including the 

gasoline ethanol blend wall, which may be around the corner. And 

I look forward to hearing from our stakeholder witnesses today and 

tomorrow on these and other issues. 

In addition to these hearings, over the last few months, Chairman Upton and I have released a series of bipartisan white papers 

discussing the RFS and soliciting public comments on the law. This 

process has been helpful, and I appreciate the majority’s efforts to 

work with the Democrats so that we can all better understand 

these issues. 

The RFS has serious issues, and I welcome the opportunity to 

take a careful look at this policy through the white papers and 

through these hearings. 

And as we move forward, we should continue to evaluate how the 

RFS could better contribute to a low carbon transportation system 

that benefits both our environment and our economy. As we consider any changes to the policy, we should ensure that the law’s climate benefits are preserved and strengthened. 

Thank you, Mr. Chairman. 

Mr. WHITFIELD. Thank you, Mr. Waxman. 

And that concludes the opening statements for the day. 

So, at this time, I would like to introduce our witnesses on the 

first panel. First of all, I want to tell you, we appreciate you getting 

your testimony to us. We read the testimony. We appreciate you 

taking the time to give us your expertise on this very important 

issue. And our witnesses are Mr. Jack Gerard, who is the president 

and CEO of the American Petroleum Institute. We have Mr. Bob 

Dinneen, who is the president and CEO of Renewable Fuels Association. We have Mr. Charles Drevna, who is the president of the 

American Fuel & Petrochemical Manufacturers. We have Mr. Michael McAdams, who is the president of the Advanced Biofuels Association. And we have Dr. Jeremy Martin, senior scientist at the 

Clean Vehicles Program at the Union of Concerned Scientists. 

So thank you for being with us. Each one of you will be recognized for 5 minutes for an opening statement. And at the end of 

that time, then we will have questions for you. 

8 

STATEMENTS OF JACK N. GERARD, PRESIDENT AND CEO, 

AMERICAN PETROLEUM INSTITUTE; BOB DINNEEN, PRESIDENT AND CEO, RENEWABLE FUELS ASSOCIATION; 

CHARLES T. DREVNA, PRESIDENT, AMERICAN FUEL & PETROCHEMICAL MANUFACTURERS; MICHAEL MCADAMS, 

PRESIDENT, ADVANCED BIOFUELS ASSOCIATION; AND JEREMY I. MARTIN, SENIOR SCIENTIST, CLEAN VEHICLES PROGRAM, UNION OF CONCERNED SCIENTISTS 

Mr. WHITFIELD. So, Mr. Gerard, you are recognized for 5 minutes. 

STATEMENT OF JACK N. GERARD 

Mr. GERARD. Great. 

Thank you, Chairman Whitfield and Ranking Member Rush and 

Chairman Upton and Ranking Member Waxman. We appreciate 

the opportunity as API to testify today to express our concerns with 

the renewable fuels standard. API represents all sector of America’s oil and natural gas industry. We support 9.2 million American 

jobs, 7.7 percent of the U.S. economy. We deliver more than $86 

million a day to the Federal Government. And we are responsible 

for delivering most of the energy that drives our economy, a responsibility that we take very seriously, which is why we are extremely concerned about the risk the RFS poses to our economy 

and to millions of consumers. 

In 2007, when Congress created the RFS, the energy market and 

our Nation’s energy landscape were very different than they are 

today. The RFS was designed to reduce greenhouse gas emissions, 

make our Nation more energy secure and provide a reliable domestic source of energy that would lessen energy imports from less stable regions around the world. 

Today we are much closer to achieving these important goals. 

Unfortunately, it is not because of the RFS. It is because of the oil 

and natural gas industry’s technological advancements and vastly 

expanded energy resources. The 21st century energy renaissance 

has driven our Nation’s CO2 emissions near a 20-year low, made 

us the number one producer of clean-burning natural gas, and put 

us on a track to become the world’s largest oil producer in 7 short 

years. Put simply, the RFS, while well intentioned, is today completely untethered from reality and unless it is immediately halted 

will unnecessarily cost our economy and consumers billions of dollars. 

In fact, the RFS and its requirements are already beginning to 

drive up energy production costs. The best example is the price volatility in the renewable identification number or RINs, which refiners must obtain when blending renewable fuels into gasoline and 

diesel. RINs are becoming increasingly scarce through the impending E10 blend wall, which is the point at which the RFS mandate 

exceeds the safe limit of ethanol in America’s fuel supply. These 

higher ethanol volumes in America’s fuel supply would void millions of car warranties. 

Today, RIN prices are near an all-time high which, according to 

an editorial in Saturday’s Wall Street Journal, translates into a 10 

cent per gallon ethanol tax on consumers at a total cost of $14 billion to our economy. Other experts, such as the Energy Policy ReVerDate Nov 24 2008 12:30 Aug 05, 2014 Jkt 037690 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-73 CHRIS
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search Foundation, EPRINC, estimates the program could increase 

the price of gasoline from 20 cents per gallon to as much as $1 per 

gallon as early as next year. Further, according to a study conducted by NERA Economic Consulting, exceeding the blend wall 

could result in diesel fuel costs rising as much as 300 percent and 

a 30 percent increase in gasoline cost by 2015. In broad economic 

terms, the RFS could cause a $770 billion decrease in U.S. GDP by 

2015 and would reduce take-home pay for American workers by 

$580 billion. 

And in an ‘‘only in Washington’’ turn of events, the RFS also 

mandates the use of a fuel that simply doesn’t exist. Currently, the 

amount of commercially available advanced cellulosic biofuels in 

the market doesn’t come close to meeting the arbitrary requirements of the RFS. In other words, RFS mandates the use of phantom fuel that could cost American consumers millions. 

All of which leads to the inescapable fact, the RFS isn’t just a 

relic of America’s bygone era of energy scarcity. It is a grave economic threat and in our view should be stopped immediately. The 

real tragedy is that this can all be prevented and can be prevented 

right now. 

To that end, we again call on the administration to immediately 

waive down the volume requirements to below 10 percent for 2013 

and 2014 and for Congress to finally repeal this fundamentally broken law. Because the stakes are simply too high for inaction, which 

could cost consumers millions of dollars, place at risk small engines 

and automobiles, and ultimately cause severe damage to our domestic economy. Thank you for your time and attention today. And 

I look forward to answering your questions. 

Mr. WHITFIELD. Thank you, Mr. Gerard. 

[The prepared statement of Mr. Gerard follows:] 

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Mr. WHITFIELD. Mr. Dinneen, you are now recognized for 5 minutes. 

STATEMENT OF BOB DINNEEN 

Mr. DINNEEN. Thank you, Mr. Chairman. 

Thank you Chairman Upton, Ranking Member Rush and Ranking Member Waxman. 

This is an important and timely hearing. And I want to thank 

you for having a balanced approach, not just with the hearing but 

with the white papers as well. This has been a process that has allowed all stakeholders an opportunity to get their views across, and 

we appreciate it. 

By virtually any measure, the RFS has been an unmitigated success. It has reduced our dependence on imported petroleum, stimulated investment in new technologies, reduced consumer gasoline 

prices, created jobs and economic opportunity across rural America, 

saved taxpayers’ dollars by lowering foreign program payments, 

and is the only program we have that lowers greenhouse gas emissions. 

My written testimony and the RFA’s responses to the committee’s white papers describe many of the benefits of the RFS. Let me 

focus on one, the success of the RFS in enhancing energy security. 

Slide one, please. 

U.S. dependence on imported oil has fallen since the RFS was enacted, from 60 percent in 2005 to 40 percent today. But it is important to note that this measure includes net imports of both crude 

oil and all other petroleum products. If just crude oil is considered, 

import dependence was 57 percent in 2012, meaning that the most 

significant reduction has been in petroleum products that is finished gasoline. That is the RFS at work. That is ethanol. 

Now Mr. Gerard suggests that our dependence on imported oil 

has fallen because of oil. And indeed, we are fracking more and 

producing more. But 62 percent of the new energy production since 

2005 has been ethanol, 38 percent oil. It is ethanol that has driven 

that number down. Now my friends in the oil industry want you 

to repeal the RFS and have pointed to the blend wall as a major 

reason they can’t meet the RFS obligation. 

So let’s take a look at the blend wall. 

Slide two, please. 

The green bar is the RFS requirement. The 13.8 billion gallons 

of corn ethanol that has to be blended this year. We will sell close 

to 13.4 billion gallons of ethanol into E10 markets, meeting the obligation for 133 billion gallons of fuel. We will also sell more than 

150 million gallons of ethanol for E85 for flex-fuel vehicles, meaning that there is just 280 million gallons of gasoline above the 

blend wall. That is what the fuss is about. 

The requirement above the blend wall this year represents less 

than 0.2 of 1 percent of the U.S. Gasoline market. The 3,000-plus 

E85 retail outlets in operation today would only need to sell an average of 15,000 gallons per month to scale the 2013 blend wall. 

With ethanol prices today about 60 cents less than gasoline, E85 

sales are spiking. And some stations are reporting E85 sales close 

to 50,000 gallons a month. And with almost 16 million FFBs on the 

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lons of E85. What blend wall? All we need is market access for 

E85, E15, and other blends, access that is being denied today by 

an incumbent industry intent upon holding onto its monopoly. 

Well, they say ethanol, the RFS and RINs are driving up the 

price of gasoline. No. 

Slide three. 

Again, ethanol is less expensive than gasoline. The RFS is saving 

consumers at the pump. And there is absolutely no correlation between retail gas prices and ethanol RIN prices. RINs are free. Let 

me repeat. RINs are free. Ethanol producers are required to give 

RINs to refiners and gasoline marketers when they purchase a gallon of ethanol. Buy a gallon of ethanol, get a RIN for free. There 

is a rather thinly traded and opaque market for RINs as oil companies trade them amongst themselves. But if they don’t like the 

price, they can always blend more ethanol and get more free RINs. 

They don’t have to short the U.S. gasoline market. And if they do, 

shame on them. 

There is no truth to the notion that ethanol and the RFS are 

driving up food prices. 

Slide four. 

In fact, food prices have actually fallen as the RFS has been implemented, with the lowest food price inflation in the past 50 years, 

1 percent occurring in 2010. There is no correlation between food 

prices and growing ethanol production. 

So what is driving food prices? It is the skyrocketing price of oil, 

of course. 

Slide five. 

Now there is a near perfect correlation. When oil prices spiked 

to $140 a barrel in 2008, so, too, did food prices. Energy drives the 

cost of all food items at the grocery store because of transportation, 

refrigeration, production, and marketing. That is why the RFS is 

so important. It is the only policy we have to moderate gasoline 

prices at the pump. Congress did an excellent job crafting the RFS, 

building in a great deal of administrative and market flexibility to 

deal with the issues as they arrive. As a result, there is nothing 

wrong with the RFS that can’t be fixed with what is right with the 

RFS. And there is no need to legislate changes to a program that 

is working as designed, even if the incumbent industry bristles at 

losing market share. Thank you. 

Mr. WHITFIELD. Thank you, Mr. Dinneen. 

[The prepared statement of Mr. Dinneen follows:] 

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Mr. WHITFIELD. And Mr. Drevna, you are now recognized for a 

5 minutes opening statement. 

STATEMENT OF CHARLES T. DREVNA 

Mr. DREVNA. Thank you Chairman Whitfield, Ranking Member 

Rush, Chairman Upton, and Ranking Member Waxman of the full 

committee. 

In 2007, Congress enacted energy legislation which in essence 

delivered a contract with the American people that promised significant steps toward energy independence and national security 

and added environmental protections. A major component of that 

contract known as the RFS called for massive amounts of renewable fuels to be blended into the Nation’s transportation fuel supply. 

In 2013, we now know that the RFS is a program based upon erroneous market assumptions, obstacles that prevent the safe consumption of ethanol at increasing mandated levels, and many other 

unintended negative consequences. These critical flaws in combination with the resurgence of domestic energy production have led us 

to one unquestionable conclusion. It is now abundantly clear that 

the RFS has systemic problems that Congress must address immediately and decisively to avoid severe economic harm to individual 

consumers and to our Nation’s economy. Ironically in a free market, as opposed to a mandated market, which somehow we have a 

monopoly on, consumer choice and economics would drive the safe 

and efficient introduction of biofuels. 

However, mandates are not the free market, and the reality is 

the RFS will raise prices for virtually all consumer goods, possibly 

leading to a consumer backlash against renewables generally, just 

not the mandate. We believe this is not the result Congress wants 

to achieve. So, in short, Congress should declare the contract with 

the American people vis-a-vis the RFS null and void and repeal the 

RFS. The flaws of the RFS are numerous, and they are here now. 

First, perhaps the most pressing issue this year is the onset of 

the E10 blend wall. As opposed to previous statements, the E10 

blend wall represents the maximum amount of ethanol that can be 

blended safely into existing infrastructure without damaging both 

vehicle and other engines. U.S. consumers are projected to use 

about 133 billion gallons of gasoline this year, meaning the E10 

blend wall is at 13.3 billion gallons. The RFS requires 13.8 billion 

gallons of corn ethanol alone. As outlined in detail in my written 

statement, E15 and E85, in spite of dramatic protestations, are not 

viable due to vehicle infrastructure incompatibility and more importantly or just as importantly the lack of consumer acceptance. 

Complicating matters further, refiners are not the entities actually blending the ethanol into the fuel, meaning the refiner must 

go into the open market to purchase a compliance credit, known as 

a RIN, so when you purchase something, it is not free. When the 

fuel supply contains a maximum amount of fuel it can handle, no 

more RINs can be generated for the refiners to achieve compliance. 

When refiners are unable to purchase sufficient RINs for compliance, they are left with only bad options, which force them to reduce the fuel supply to the U.S. market. 

30 

Likewise, importers of gasoline also look elsewhere to market 

their products. These economic consequences, also detailed in my 

written testimony, could be staggering. Meanwhile, the harmful 

impacts of the approaching blend wall have already begun. One example is the dramatic increase in the market price of ethanol 

RINs. Prior to the onset of the blend wall, RINs traded at 4 to 7 

cents. However, as the market anticipates the scarcity, RIN prices 

rose to as much as $1.48 just last week. A refiner that purchases 

all of its RINs now faces an implied 15 cent per gallon premium 

to sell fuel in the United States. 

Trade press is already reporting that importers are turning to 

gasoline imports to other countries to avoid this RIN tax. Much of 

my time has been spent talking about the impact of the blend wall. 

By doing so, I do not want to underemphasize the other negative 

impacts, including that on food and feed supply. And as we also 

know, from EPA’s own data, the RFS is actually undermining its 

environmental goals. There are many additional problems created 

by the RFS, which are detailed in my written statement. Before 

concluding, however, let me be clear, AFPM is not anti-ethanol or 

anti-biofuels. Both can and will play a significant role in the fuel 

mix. But they must be safely integrated into the fuel supply and 

accepted by consumers. AFPM does oppose mandates and subsidies 

because they limit consumer choice, stifle innovation, and in the 

case of the RFS, are ultimately harmful to the consumer. In short, 

this unworkable law should be repealed. Thank you for your attention, and I look forward to fielding any questions you may have. 

Mr. WHITFIELD. Thank you, Mr. Drevna. 

[The prepared statement of Mr. Drevna follows:] 

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59 

Mr. WHITFIELD. And Mr. McAdams you are recognized for 5 minutes. 

STATEMENT OF MICHAEL MCADAMS 

Mr. MCADAMS. Thank you, Mr. Chairman, Chairman Upton, 

Ranking Minority Rush, Ranking Minority Member Waxman, and 

members of the committee. It is an honor to be with you today on 

behalf of the Advanced Biofuels Association. 

The Advanced Biofuels Association represents more than 40 of 

the leading technology innovators in the advanced and cellulosic 

biofuels space as well as a number of the agriculture biomass to 

energy feedstock producers. In the past 3 months, the Advanced 

Biofuels Association has responded to four of your white papers 

and is currently preparing a fifth. We congratulate the committee 

and your staff for this bipartisan, thoughtful, and substantive approach. Given that ABFA has provided the committee detailed answers on the RFS, I would like to take a step back this morning 

and try to accomplish three things. 

First, I would like to set a context around the RFS. Second, I 

would like to call the impacts of the debate into focus. And lastly, 

I would like to offer a solution set for your consideration. Congress 

expanded the RFS to stimulate an advance in cellulosic biofuels industry to encourage larger greenhouse gas reductions and to develop more energy dense drop-in fuels. Many of these new advanced biofuels are hydrocarbons, and they are compatible with the 

existing pipelines, refineries, planes, trains, and automobiles. ABF 

members are delivering on that vision today. Today’s hearing is 

largely about concerns surrounding the blend wall. Simply stated, 

it is the mismatch between the number of gallons of gasoline the 

U.S. market is demanding and the number of gallons of ethanol the 

RFS calls to be mixed into that gasoline. 

With a 10 percent limit on the ethanol to gasoline ratio, there is 

a mismatch this year of roughly 500 million gallons. However, the 

RIN bank carryover provisions in the law allow the RINs from 

2012 to meet the proposed targets in 2013. And they are enough 

this year to easily achieve the proposed mandate. The RIN market 

makers, however, they question whether this will be the case in 

2014 and 2015. This year, the United States of America will use 

213 billion gallons of fuel. And of that, about 15 billion gallons will 

be renewable fuel. The 500 million gallon mismatch represents 1/ 

30th or 3.3 percent of the entire production of renewable fuels in 

the United States and 0.2 percent of 1 percent of the amount of 

fuel we use in America. 

Additionally, much has been made about the shortfall of the cellulosic gallons. I would argue that the recent court case that my 

colleagues on the panel here were victorious in has adequately addressed the phantom fuel issue. And this year, we will see significant gallons in the cellulosic pool, which began to be placed on the 

EMTS system last month. Calling for the full repeal of the RFS 

over a short-term issue impacting less than 1 percent of all the 

fuels we use in America doesn’t make a lot of sense as a public policy solution. 

For ABFA’s members, the debate over repealing the RFS is having a chilling impact on the investment community and is restrainVerDate Nov 24 2008 12:30 Aug 05, 2014 Jkt 037690 PO 00000 Frm 00067 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-73 CHRIS
60 

ing the growth and ability of our members to move forward. Despite this, many of them are making real gallons of cellulosic gasoline and diesel today as well as renewable diesel and other RFS approved fuels. In the last 6 years, U.S. businesses in the private sector have spent $14.72 billion in pursuit of the policy goal you collectively laid down in this committee. According to Bloomberg New 

Energy Finance, $33 billion has been invested worldwide in this 

sector. That means we are almost half of the world’s investment. 

These numbers represent people and jobs all over America, jobs 

in rural America planting and cultivating the best new energy 

crops, jobs building and operating biorefineries, technology and engineering jobs and laboratory jobs researching new feedstocks and 

enzymes and many more. To repeal the RFS would pull the rug 

right out from under them and change the rules in the first half 

of the game. This confusing policy signal is a benefit to the incumbent players in the fuels market and is a significant disadvantage 

to those trying to finance and build new innovative technologies. 

A potential short-term solution can be found in EPA. When Congress passed the RFS II in 2007, it provided EPA with significant 

flexibility and authority to address issues which could arise from 

hurricanes, droughts, and unforeseen economic factors. Much of 

what is difficult about the RFS today is the uncertainty surrounding the obligations on a yearly basis. ABFA and others on 

this panel and panels after this one have called for EPA to release 

the renewable volumes obligations for 2013 and 2014 as quickly as 

possible. Providing an additional year of clarity with a framework 

for the 2015 RDOs would help rapidly diffuse much of the economic 

pressure those of us on this side of the table are feeling. 

The committee should encourage EPA to explore a combined 

2014–2015 framework. A clear signal from EPA given to the stakeholders in advance would be a huge step forward in adjusting 

EPA’s procedure to help all the markets work more smoothly. 

Thank you for the opportunity to testify with you today. And I look 

forward to your questions. 

Mr. WHITFIELD. Thank you, Mr. McAdams. 

[The prepared statement of Mr. McAdams follows:] 

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Mr. WHITFIELD. And Dr. Martin, you are recognized for 5 minutes. 

STATEMENT OF JEREMY I. MARTIN 

Mr. MARTIN. Thank you very much, Chairman Whitfield, Ranking Member Rush, Chairman Upton, Ranking Member Waxman, 

and members of the subcommittee. 

Thank you for the opportunity to testify about the Renewable 

Fuel Standard. My name is Jeremy Martin. I am a senior scientist 

working on biofuels policy at the Union of Concerned Scientists. 

USC is the Nation’s leading science-based nonprofit, putting rigorous independent science to work to solve our most pressing problems. I have been asked to address the environmental impacts of 

the RFS. But we need to start with the challenge the RFS was designed to address, cutting U.S. oil use. 

Despite increased domestic production and new unconventional 

oil resources, the problems caused by our oil use continues to 

mount. Oil prices remain high and unstable. Oil-producing regions 

remain critical security threats. Oil spills continue, as do extreme 

weather events made more damaging by climate change. The need 

to reduce oil use remains just as important today as it was 5 years 

ago. The RFS is an oil saving policy based on smart goals, not just 

more biofuels but better biofuels and biofuels that go beyond food. 

The RFS supports increased domestic production of clean, low carbon biofuels. 

Together with improved efficiency, electric vehicles, and other innovative technologies, biofuels can cut our projected oil use in half 

over the next 20 years and reduce the problems oil use causes to 

our economy, to our security, and to our climate. But despite having smart goals, neither the RFS nor its implementation to date 

have been perfect, and there are significant challenges that need 

to be addressed. 

The rapid expansion of food-based biofuels over the last few 

years is unsustainable. It is putting pressure on other users of 

corn, affecting global food markets, increasing water pollution 

caused by corn farming, and accelerating deforestation. 

In contrast to the problems of the food-based fuels, the opportunities to expand production of cellulosic biofuels are substantial. 

Based on our analysis, the $16 billion target for cellulosic biofuels 

in the RFS is definitely achievable. And because cellulosic biofuels 

have low fossil fuel inputs and low lifecycle emissions, the potential 

greenhouse gas mitigation is large. But while the resources to 

make cellulosic biofuels are substantial, converting them into clean 

fuel requires a massive scale-up of biorefineries. The first commercial scale cellulosic biorefineries are starting up now in Florida and 

Mississippi. Several more are under construction in Iowa and Kansas. And this is a major milestone. And it wouldn’t happen without 

the RFS. 

But clearly, it is behind the schedule laid out in 2007. It will 

take time to scale up a new fuel industry, as it did for both the 

oil and corn ethanol industries. However, the mismatch between 

the schedule laid out in 2007 and the actual scale up creates some 

ambiguity about the road ahead which needs to be thoughtfully resolved. Fortunately, the RFS was designed with a great deal of 

68 

*The information has been retained in committee files and is also available at http:// 

docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=101184. 

flexibility, especially with regard to the second phase of the policy 

that shifts from food-based fuels to nonfood-based cellulosic 

biofuels. Many critical analyses of the RFS are based on an assumption that the EPA will ignore this flexibility, ignore the flexibility that Congress provided them and will expand mandates from 

just over 15 billion gallons in 2012 to 20 in 2015 and 36 in 2022. 

But this assumption defies common sense. EPA has a clear authority to cut the rate of mandate growth in half between now and 

2015 and to reduce the 2022 target from 20 billion gallons to 

what—from 36 billion gallons to 20 billion, plus whatever quantity 

cellulosic biofuels produce. Adopting a more gradual approach will 

substantially reduce the challenges facing RFS implementation in 

coming years. I have provided more detail on our advice in this regard in comments to the EPA and in my written testimony. EPA 

needs to seize this opportunity and reset expectations for the next 

phase of the policy from now until 2022 and develop a roadmap 

that delivers on the important goals of the RFS but is realistic 

about the competing uses of agricultural commodities and the rate 

at which cellulosic production can scale up and the constraints in 

our vehicle and fueling infrastructure. But making legislative 

changes to the Renewable Fuel Standard at this time would not reverse the problems caused by the rapid scale up of corn ethanol 

over the last 10 years. Instead, it would lock in place the status 

quo of 90 percent gasoline and 10 percent corn ethanol and chill 

investments in cellulosic biofuels, just as the first commercial facilities are starting up. 

For this reason, we do not support legislative changes and suggest that making course corrections through an administrative 

process will do more to realize the oil savings and refinement goals 

of the RFS. 

We are not moving forward as fast as we hoped to be in 2007. 

But the RFS is still pointing us in the right direction. To keep moving forward, we need to provide the regulatory stability that will 

protect early investments in the advanced biofuels industry and 

support further investment to bring the technology to larger scale. 

Thank you again for the opportunity to be here today. I would 

like to request that the USC reports that I alluded to on biomass 

resources and the comments we submitted to EPA on the 2013 

rulemaking be submitted for the record. And I look forward to any 

questions that you may have. 

Mr. WHITFIELD. Without objection, they will be entered into the 

record. *

Mr. MARTIN. Thank you. 

[The prepared statement of Mr. Martin follows:] 

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Mr. WHITFIELD. I thank you all very much for your testimony. At 

this time, I recognize myself for 5 minutes. 

As I am sure all of you know, the American Petroleum Institute 

filed a lawsuit in Federal court against the EPA on the 2012 cellulosic number mandate. 

And, Mr. Gerard, you all won that lawsuit. Is there anyone on 

the panel that would disagree with the principle that if EPA sets 

a mandated number for, like, cellulosic ethanol, and it cannot be 

produced, that refiners should be forced to buy the RINs anyway? 

Do any of you disagree with what the API did in that situation? 

In following the lawsuit. 

Mr. MCADAMS. Mr. Chairman, I would say that the lawsuit was 

very specific in the way the opinion was written. What the lawsuit 

specifically said, which Mr. Gerard and Mr. Drevna should have 

enjoyed hearing, was specifically EPA could no longer put its 

thumb on the scale. And so to the extent anyone could make the 

assertion previously that what EPA was trying to do was stimulate 

our industry, by driving a number that was unrealistic, that lawsuit makes it directly clear that they can no longer do that. In 

terms of talking to the folks that run the program at EPA last 

night, I am confident that what we will see is a revision in the 

2013 cellulosic number which takes into account the court direction 

to more closely align what the actual number is with the actual 

gallons that would be made. 

Mr. WHITFIELD. And all of you would certainly agree with that 

principle, I am assuming. 

Mr. Drevna? 

Mr. DREVNA. Chairman Whitfield, we absolutely agree. However, 

we have to look at what the reality is as compared to the rhetoric. 

EIA projects by 2022, that there will be 0.5 billion gallons of cellulosic. Mr. Chairman, with all due respect, I have been sitting in 

these hearings on both sides of the of Congress since February of 

2008, short 2 months after this bill was passed. And I have been 

hearing for 7 years now that cellulosic ethanol is just around the 

corner and all we need is another mandate and people will invest. 

Well, people will invest. But you know if the technology doesn’t 

work, it doesn’t work. 

Mr. GERARD. Mr. Chairman, I would just add, part of the dysfunction of this particular statute is that within a week or 10 days 

after we prevailed in that lawsuit, the EPA came out with their renewable volume requirement for 2013 and added back a number 

higher than the one they had the previous year that we prevailed 

on in the lawsuit. Now if you are concerned about what the market 

is seeing out there, again, the judge said, You can’t put your hand 

on the scale, as Mr. McAdams said. But the EPA immediately 

turned around and raised it from 8 million to over 11 million. And 

once again, there is not that in the market. Our expectation, our 

understanding to date is we have got about 5,000 gallons so far 

this year. We are halfway through the year. And the mandate in 

the statute is a billion. They narrowed that down to about 11 to 

14, depending upon how you interpret that. But once again, the 

market sees this as no action being taken. That is why this is so 

important on the part of this committee and the EPA. They send 

a signal to the market, you are going to correct this problem. 

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*The information has been retained in committee files and is also available at http:// 

docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=101184. 

Mr. DINNEEN. Mr. Chairman, if I could, two quick points. One, 

this actually demonstrates that there is incredible flexibility within 

the program, within the statute for EPA to do the right thing. They 

have reduced the cellulosic number more than 98 percent in each 

of the 3 years that the RFS has been in place with the cellulosic 

requirement. That is because of the flexibility that this Congress, 

this committee gave to the agency to do the right thing. 

Now the court said, You can’t be aspirational. And we all agree 

with that. They all ought not have their thumb on the scale. But 

they do need to be accurate with how much cellulosic and other advanced biofuels are going to be produced. 

And that is my second point. The fact of the matter is cellulose 

and advanced biofuels are here today. If you wouldn’t mind, I 

would like to introduce into the record a pamphlet that was put together by the Advanced Ethanol Council that demonstrates exactly 

where cellulosic investments are being made today. 

Mr. WHITFIELD. Without objection. *

Mr. DINNEEN. And you do have commercial sized facilities being 

built in Kansas in Florida, in California, all across the country. 

And if we pull the rug out from under these facilities today, none 

of that investment moves forward. And my friends on either side 

of me get what they want, and that is a continued stranglehold on 

the U.S. gasoline marketplace. 

Mr. WHITFIELD. Dr. Martin, do you all have any figure in mind 

for cellulosic production in the future? Right now, total gasoline is 

about 213 billion. I mean, do you all have a number you are looking at? 

Mr. MARTIN. Well, certainly in terms of—I mean, we have been 

looking at the impacts of the different choices more broadly. And 

I would say what we have learned over the last few years is that 

impacts on the underlying feedstocks, on whether it is corn or vegetable oil or biomass, it is important. And there is plenty of biomass 

to meet the 16 billion gallon target. I think it is clear that that is 

not going to happen in 2022. And it is likely to take us closer to 

2030. The date that that happens is not an external factor. It depends a great deal on the policies that are set here, which will determine how quickly people make investments and what that date 

is finally. 

Mr. WHITFIELD. Thank you very much. 

Mr. Rush you are recognized for 5 minutes. 

Mr. RUSH. Thank you, Mr. Chairman. 

I have a question that I would like to have all of the panelists 

respond to. I would like you to be brief in your response. I only 

have 5 minutes. I need some initial questions to be answered. 

The U.S. has globally compared electricity prices in large part because we have diverse fuel choices—nuclear, coal, gas, wind, solar, 

hydro, geothermal, and biomass all used to generate power. However, in the area of transportation, we are almost entirely reliant 

on petroleum. What more diversity in the transportation fuel 

sources such as renewable fuels also provide consumers and the 

economy more protection from price shocks? 

89 

I will start with you, Mr. Gerard. Please be brief. 

Mr. GERARD. OK. I will. Thank you very much for the question. 

In the broader context, diversity is good. We see that natural gas 

has become a major player in electricity generation, as you know, 

in helping drive down the carbon emissions in this country. The 

important thing to remember though and the thing we will emphasize here is you have to look at the costs related to consumers. We 

have been using gasoline for many years in this country. It is affordable, reliable in the context competing other fuels. So diversity 

is good. But always look at it in the context of what it actually 

costs the consumer. 

Mr. RUSH. Mr. Dinneen. 

Mr. DINNEEN. I absolutely agree with the premise. I think diversity is critical to driving down cost. I would suggest that my friends 

in the oil industry believe diversity means we get oil both from the 

Gulf of Mexico and the Baakens. But that is not diversity. And that 

is not going to help consumer gasoline costs. In fact, if gasoline or 

oil were to fall below $90 a barrel, none of those investments in the 

Baakens make any sense economically. So the only way you are 

going to help consumers and drive down the cost of gasoline is with 

domestic renewable alternatives and renewables. 

Mr. RUSH. Mr. Drevna. 

Mr. DREVNA. I will agree that we can have a diversified fuel supply, but a couple items, Mr. Ranking Member. 

One, the oil and refining industry does not control the transportation infrastructure to get the product to the consumer; 95 percent 

of those service stations are owned by private individuals. 

Number two, the idea that we—that the refiners and those relying—you know, producing a product that is efficient, reliable and 

abundant to the American consumer is somehow detrimental to the 

economy boggles my mind. 

Number three, when the cable industry looked around and saw 

there were only three options for television viewers, they bellied up 

to the bar, they invested lots of money, and right now, over 60 percent of the households in this country have cable TV. 

I ask my colleagues to the left and right of me, if it is so good, 

invest. You don’t need a mandate. 

Mr. RUSH. Thank you. 

Mr. McAdams. 

Mr. MCADAMS. I agree with your assertion, Congressman. 

Mr. RUSH. All right. 

Mr. MARTIN. I think the best way to protect the consumers from 

the price of oil and gasoline is to use less, and biofuels are a part 

of the diverse set of strategies to accomplish that, and, of course, 

there is a great diversity of biofuels that contribute to that. 

Mr. RUSH. Thank you, Dr. Martin. 

And you get an A for the diverseness of your answer, and because you were so great, I want to give you another question. 

Mr. MARTIN. Wonderful. 

Mr. RUSH. In your testimony, you acknowledged the RFS is not 

perfect. Is it your opinion that EPA has the tools and the authority 

to deal with challenges as they arise, or does the Congress need to 

actually modify the law? 

90 

Mr. MARTIN. After having studied this at some length, it is my 

belief that the EPA has the tools it needs in the statute as it is 

written to address the immediate challenges and to set a long-term 

path. I think it is important that EPA be aggressive about demonstrating its intention to use that flexibility and in convening a 

stakeholder process. And I agree with Mr. McAdams that not just 

doing one year at a time, but really looking further down the road 

and laying out how these decisions will be made over a multi-year 

time frame will provide all the players the support, the certainty 

and the anticipation they need to make smart investments. 

Mr. RUSH. Well, I thank you, Mr. Chairman. I have 10 seconds 

left, and I want to reserve my 10 seconds. 

Mr. WHITFIELD. The gentleman reserves his 10 seconds. 

At this time, I recognize the gentleman from Louisiana, Mr. 

Scalise, for 5 minutes. 

Mr. SCALISE. Thank you, Mr. Chairman. 

I appreciate you having this important hearing and all of our 

panelists, both the first and second panel that are going to be testifying, because there are a lot of important components of the RFS 

that need to be brought to light, and consumers are starting to 

have a lot of serious questions, as they should. I think when you 

look at the assumptions that were made back in 2007, many of 

those predictions didn’t come true and we are starting to see the 

problems that that creates. 

One of the reasons that I support full repeal of the RFS is because, number one, it is not workable. And we have had many 

hearings, including people within the Obama administration, EPA, 

EIA, USDA and others that talk about all of the problems that are 

coming both near term and long-term, and so when you look at 

these problems, they are very real problems, you can’t just gloss 

over it, but when you look at the fuel projections alone, the usage 

is down and the revolution that some of you have talked about that 

has brought so many more forms of American energy to market to 

bear have not been recognized. 

And so I want to start off, if I may, when you look at Mr. Gerard 

and Mr. Dinneen and Mr. Drevna on the panel and hearing each 

of you, very, very conflicting testimonies that have been given, so 

I want to give you an opportunity to expand a little further on 

some of the things that you have all said. 

I will start with you, Mr. Dinneen. You said RINs are free. And 

anytime somebody’s talking about something from the government 

being free, you usually check your pocket book first and start getting real concerned. When you talk to people about the RINs and 

the dramatic fluctuations in the price, this was something that was 

sold as a stability force. And the RINs are in fact not free. They 

started off at a very low price and have gone dramatically higher. 

Can you address the fluctuations in the price of RINs, which are 

not free, but in fact are much more expensive today than when this 

legislation was passed in 2007? 

Mr. DINNEEN. Sure, Congressman, but understand my point is 

the ethanol industry, when we produce a gallon of gasoline, we by 

statute and by regulation have to give that credit to the oil companies. They get them from us for free, without any question. Now, 

there is a—as I said—— 

91 

Mr. SCALISE. But is it just them that are getting them? Because 

one of the questions is, do you have some of these Enron-type players that are getting into the marketplace buying up RINs to help 

jack up the price to help make it an Enron trading commodity instead of something that was established to bring stability to fuel? 

Mr. DINNEEN. The oil companies wanted the RIN system, wanted 

a credit trading program to bring flexibility to the RFS, which I believe it has done, but as they raised—— 

Mr. SCALISE. Is it just the oil companies that have these RINs? 

Mr. DINNEEN. I am sorry? 

Mr. SCALISE. Is it just the oil companies that have these RINs? 

Mr. DINNEEN. No. They—— 

Mr. SCALISE. They have some—— 

Mr. DINNEEN [continuing]. Marketers. 

Mr. SCALISE. And I apologize. My time is very limited. Mr. Gerard, if you could touch on this as well. 

Mr. GERARD. Yes, as refiners, we are the obligated parties, so we 

are the ones that have to produce the RINs. We don’t get all the 

RINs, and we certainly don’t get them for free, because in many 

instances whoever is blending that fuel and gets that RIN, we have 

got to go buy that RIN to meet our obligation, because we are the 

obligated party. 

The more fundamental issue here, as you know, Congressman, is 

the E10 blend wall. The market sees it coming, it sees it head-on, 

there is pressure out there from those of the obligated parties to 

make sure they have got enough to meet their requirements under 

the RFS. That is what is driving that cost, that is what the experts 

say the problem is. That is that we have got to deal with that blend 

law. 

Mr. SCALISE. And you mentioned on the—I know Mr. Dinneen 

talked about the EPA having flexibility in the law to address the 

numbers. I agree EPA has the flexibility. They have not exercised 

it. We sure haven’t seen them doing the things they ought to be 

doing in the short term. In the long term, I agree, though, that 

Congress does have to address it for the long term. 

Mr. Drevna, you had something? 

Mr. DREVNA. The essence of the problems with the RINs emanated with the EPA, when the first EPAct 2005 was written, and 

it was only seven and a half billion gallons by then. Of course, before the ink was dry, it went up to 36 billion in years. 

We suggested to EPA that we should be able to trade freely with 

the credits. They said, No, we want a free market. Our response 

was, it is a mandate, folks, so there is no free market. They didn’t 

buy that. 

Then they said, OK. Refiners and importers, you are the obligated party. And we said, Wait a minute, if we can’t trade the 

RINs among ourselves, how are you going to—how are you going 

to have this market work? And we said, It wouldn’t work. 

And right now, not only are there RINs that are expensive and 

not free, there are 140 million fraudulent RINs out there that we 

still have to deal with, and who knows how many more, because— 

and I understand the FBI is still investigating some of the biodiesel 

folks. 

92 

Mr. SCALISE. Absolutely. And I know I am out of time, and I 

have more questions I will reserve for the second panel, but I appreciate that, Mr. Chairman. I will be happy to yield back. 

Mr. DINNEEN. If I could just—one quick point, because I think 

you are going to like it, because I will acknowledge that there is 

an issue here, and that is we need to have more transparency with 

the RIN market. And I do think EPA could help this situation by 

letting us know who is making the trades, how many trades, what 

the price is. Right now, there is no transparency whatsoever. 

Mr. SCALISE. All right. And unfortunately, they have not been 

willing to do that either. Thank you. I appreciate it. 

Mr. WHITFIELD. At this time, I recognize the gentleman from 

California, Mr. McNerney, for 5 minutes. 

Mr. MCNERNEY. Well, I thank the chairman. Wow, what a diverse set of testimony, and I want to thank you all for your passion 

on this issue. It is an important issue, and it is a—it should be a 

bipartisan issue. So, again, thank you for testifying. 

Dr. Martin, you suggested that the EPA should produce a realistic roadmap for introducing biofuels into the market—I see Mr. 

McAdams was shaking his head yes—using the flexibility that is 

built into the statute. What do you think are the chances that the 

EPA will do that? I mean, how likely is it that they are going to 

come through with something like that? 

Mr. MARTIN. Oh, well, I am quite optimistic about that. I mean, 

it is a challenging process to—especially to do a multiyear process, 

and I think they have been going through one year at a time, and 

it has been quite a lot of work, but I think all the parties would 

be better served by providing at least a framework for multiple 

years. 

Mr. MCNERNEY. Well, they have the flexibility to do that, but 

last year’s drought caused real problems, there were 150 Members 

of Congress and Governors that asked them to waive the ethanol 

mandates, and they didn’t. How do you feel that that came about 

and what is your response? 

Mr. MARTIN. Sure. Well, we supported making adjustments last 

year to the mandate in light of the drought, but I would say that 

the kind of flexibility in the second phase of the policy, and in particular how quickly we get to 36 billion gallons, this isn’t the same 

waiver process with a real relatively high bar. It is an entirely different process, and really, it is—it is just a discretionary matter. 

So, in some respects, I think it actually makes more sense to describe the 2022 target as 20 billion plus, sort of 20 billion gallons 

plus however much cellulosic gets produced, and EPA has discretion to go higher, but they have no obligation to go higher, and so 

I think, in some respects, analyses which are based on the assumption that we get to 36 billion in 9 years are flawed, because that 

assumption is just not a realistic assumption anymore. 

Mr. MCNERNEY. OK. So you think they are showing flexibility in 

some ways and not in others? 

Mr. MARTIN. Well, they haven’t shown flexibility up to now. And 

so, as I said, we encouraged them to do that last year. Last year, 

the circumstances were very different, as has been alluded to several times. I mean, when there were petitioned last year, RIN 

prices were very low, and that, you know, without any fancy ecoVerDate Nov 24 2008 12:30 Aug 05, 2014 Jkt 037690 PO 00000 Frm 00100 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-73 CHRIS
93 

nomics is a demonstration that obligated parties were not trying to 

buy their way out of complying with the standard. And so EPA’s 

analysis said, look, if we reduce the standard, not much is going 

to happen. And I think you have other panelists later who will address this in more detail. Obviously, with RIN prices where they 

now, the circumstances are quite different, and so what I understood from EPA is that they don’t view those past decisions as providing the framework for future decisions, and they recognize the 

need to be flexible. 

Mr. MCNERNEY. Well, thank you. You also mentioned in your 

testimony that the—or you acknowledged anyway the cellulosic 

biofuels have not lived up to their potential. Do you see that happening? I mean, how do you see that happening, or what has been 

the roadblock so far? 

Mr. MARTIN. Well, certainly the law was passed at the end of 

2007 and based on some presumptions about how quickly capital 

could be raised. And 2008 and 2009 were tough years for raising 

capital in all industries, and that was certainly a setback. 

I think a case can be made that the numbers were always optimistic. And, frankly, the structure of the law, which essentially 

says that this is the maximum, not the minimum level for the 

standard, reflected an understanding that this wasn’t something 

that could be counted on, but was an aspirational—— 

Mr. MCNERNEY. So, with the current trajectory, you believe that 

we can meet—what I think you said, we can cut our oil by 50 percent in 20 years. Do you think that is realistic, then? 

Mr. MARTIN. Yes. Not solely on the basis of biofuels. I mean, if 

we look at cutting our oil use, efficiency has a big role, electrification, we need to do all of these things to make those kind of deep 

reductions, but biofuels definitely have a key role in a kind of comprehensive strategy like that. 

Mr. MCNERNEY. Thanks. 

Mr. Dinneen, you had some pretty striking data that you showed 

on your graphics, and I think—and I didn’t—I am not sure I got 

the numbers exactly right, but 60 percent of new oil—or new fuel 

production is from ethanol and only 38 percent is from oil? Were 

those the numbers? 

Mr. DINNEEN. 62,005, correct, 62 percent of 38 percent, because 

you got to remember through 2005, 2006, 2007 and 2008, oil production in this country, it continued to fall. It wasn’t until 2009 

that oil production had begun to increase, which is a good thing, 

and we are happy about that. I am just pointing out that you can’t 

say that the reduction in energy dependence that has occurred 

since 2005 is because of oil. It is not—68 percent of it—I am sorry. 

Sixty-two percent of it is because of a growing ethanol market. 

Mr. MCNERNEY. Well, I have run out of time, Mr. Chairman. 

Mr. GERARD. Mr. McNerney, if I could just comment. We would 

strongly—— 

Mr. MCNERNEY. If the chairman will allow it. 

Mr. WHITFIELD. The gentleman’s time has expired, but I will let 

you all briefly respond; not very long, so—— 

Mr. GERARD. I will be very brief. Thank you. We would say that 

clearly our import reliance has gone down considerably because we 

increased oil production. We have increased over 2 million barrels 

94 

a day in our production the last 4 years at the same time ethanol 

production has increased about 250,000 gallons per year, so there 

is a big disparity. It is a very different equation. 

Mr. WHITFIELD. Mr. Dverna, did you want to make one comment? 

Mr. DREVNA. It is not the oil industry saying it, it is the Energy 

Information Administration saying in testimony before the Senate 

last week that the impact of ethanol production on oil imports is 

minimal. 

Mr. WHITFIELD. OK. Mr. Barton is recognized for 5 minutes. 

Mr. BARTON. Thank you, Mr. Chairman. 

You know, it is too bad you couldn’t get a few more witnesses for 

this hearing. We are certainly going to have the most comprehensive hearing record. 

Mr. WHITFIELD. If anybody in the audience wants to testify. 

Mr. BARTON. Yes. I have been on both sides of this issue. Obviously, in 2005, the original mandate was in the Energy Policy Act, 

which I was one of the chief authors of. I voted against the 2007 

act, which took what we did in 2005 and basically increased it by 

order of magnitude five times. 

We are in a situation now where what appeared to be a good political compromise and maybe even a market compromise, you 

know, 8, 9 years ago, doesn’t appear to be working, not because of 

its good intentions, but because the marketplace has changed. We 

thought that gasoline consumption in the United States was going 

to continue to go up. Well, it has not. It has gone down considerably. And while I don’t have the exact number, I believe this year 

the difference between the projection and what we think is going 

to be reality is 30 to 40 billion gallons of gasoline. That is a significant discrepancy. 

So the question before the committee is, what do we do? And you 

have got three options: One is do nothing, which Congress is very 

good at. Just let the mess keep going. The second option is to repeal the renewable fuel standards, and that is where I am. I think 

with all the good intentions in the past, basic principle is when all 

else fails, go back to basic principles, which is let the market operate. And then the third option be to modify the renewable fuel 

standards. And my guess is a majority of the committee is probably 

at that option, modification, take the middle road, but I am for full 

repeal. 

So my first question would be to my friend from the renewable 

fuels association, who has I think done a fairly eloquent job of putting the best face on this, what would happen if we repealed the 

renewable fuel standard to the ethanol industry? Would it go away, 

would it continue to flourish, or would it be somewhere in between? 

Mr. DINNEEN. Thank you, Congressman. 

First of all, let me compliment you again on crafting the 2005 

RFS, because you really did craft a good piece of legislation with 

lots of flexibility for EPA to address the situations, and it has. 

If the RFS were repealed, though, Congressman, I think that you 

would first of all devastate investments that are being made in 

next generation biofuels. All of the progress that is being made 

today would go away, and I think that would be a terrible thing. 

95 

Mr. BARTON. It would—the harm would be to Mr. McAdams’ 

group, not necessarily to the pure corn-based ethanol. 

Mr. DINNEEN. Actually, that would be the first impact. There absolutely would be an impact to the existing industry as well, however. Back in 2007, when we were holding hearings on the RFS, 

there was a member of the oil industry that was asked, if we didn’t 

have this program, how much ethanol would you use? And that 

person had indicated, well, you know, we would still want to use 

ethanol for its octane, but we would probably use about 5 billion 

gallons of ethanol. That was a candid moment, and I think that is 

what you would see. You would see a dramatic reduction in the use 

of ethanol in fuel as they replaced it with their own petroleum. 

These folks are in the business of through-putting hydrocarbons, 

not—— 

Mr. BARTON. My time is about to expire, and I do want to give 

the other side a chance, since I am actually with the other side. 

Mr. DINNEEN. But you were with us at one time, Congressman. 

Mr. BARTON. No. I am not against you, not against you. 

But, Mr. Martin or Mr. Gerard, if we repealed the ethanol mandate, if we repealed the renewable fuel standard mandate, since 

ethanol right now does cost less per gallon than gasoline, wouldn’t 

the oil industry continue to use ethanol and blend it in because it 

is less expensive? 

Mr. GERARD. Well, a couple things. First, we are pleased with 

your conversion. 

The second thing is ethanol, let me just say this, on a BTU basis, 

does not cost less than gasoline. 

Mr. BARTON. OK. On a BTU basis. 

Mr. GERARD. So that is an important consideration, because you 

have to compare energy to energy, not gallons. 

Mr. BARTON. OK. 

Mr. GERARD. First thing. EIA testified last week, as did the Department of Agriculture, that it is likely that where current production isn’t, current blending would remain. In fact, they believe 

there would be very little change, because of the octane values and 

other things that are part of the blending process. 

Mr. BARTON. And, Mr. Chairman, could I ask Mr. McAdams a 

question, or I would be happy to yield back, because I know my 

time has expired? 

Mr. WHITFIELD. Yes. Did Mr. McAdams want to make a comment 

or—— 

Mr. WAXMAN. I ask unanimous consent that our former chair—— 

Mr. WHITFIELD. Mr. Waxman asks unanimous consent that you 

ask one additional question. 

Mr. BARTON. Well, I appreciate Mr. Waxman for being nice to me 

for—I almost said for a change, but that would be not cool. 

But cellulosic has always been portrayed as the great hope, that 

we knew that ethanol from corn was somewhat inefficient, but we 

were told that if we could ever get to the cellulosic era, that it 

would be very efficient and very cheap. It hasn’t happened yet. 

What is the realistic expectation of the ability to get ethanol from 

cellulosic—cellulosic sources? Is that still 10 years down the road 

or are we close to—— 

96 

Mr. MCADAMS. No, sir. While I sit in front of you—thank you for 

the question, Mr. Chairman. I appreciate the opportunity to answer 

this. 

As I sit in front of you today, there is a facility in Mississippi, 

in rural Mississippi, by the name of KiOR. It is a pyrolysis facility. 

It is crushing pine trees. And it is not making ethanol; it is making 

gasoline and diesel. And Mr. Gerard’s and Mr. Drevna’s clients, 

Chevron, and Hunt Petroleum have made 100 percent of the offtake purchases of that fuel. That plant came online in March. It 

is a new innovative plant. It is now a full capacity, running flat out 

and the RINs have gone on the market, effective this month for 

July. There are other plants, Dupont has one in Iowa. POET has 

another one. 

There is a range of cellulosic technologies that are coming into 

being now on a commercial basis. They are being funded commercially. There are about five or six of them that is in the book that 

Bob has put onto the record. 

The other thing I want to say is, don’t overlook the advanced 

biofuels technology. I had the opportunity to witness the F–18’s fly 

off the deck USS Nimitz using a hydro-processing technology in 

Louisiana, making 45 million gallons of renewable diesel. 

So you are seeing both advanced biofuels and cellulosic biofuels 

come. And I agree with your assertion. If you repeal the RFS, the 

guys that get hurt the most are the members that I represent. 

Mr. BARTON. OK. Thank you very much, Mr. Chairman. 

Mr. WHITFIELD. At this time, I recognize the gentleman from 

California, Mr. Waxman, for 5 minutes. 

Mr. WAXMAN. Thank you, Mr. Chairman. I would like to explore 

how the RFS aims to reduce carbon pollution, how well it is working and whether there are ways to strengthen its climate benefits. 

Mr. McAdams and Mr. Dinneen, do you agree that reducing carbon pollution through the use of low-carbon renewable fuels is a 

critical goal of the RFS? 

Mr. MCADAMS. Absolutely. As we move to 9 billion people on the 

world and other—other places around the world other than America increase their use of energy demand—— 

Mr. WAXMAN. You agree. 

Mr. MCADAMS [continuing]. Having sustainable fuels—yes, sir. 

Mr. WAXMAN. You agree. 

Mr. DINNEEN. Without a doubt. Absolutely it is. And, in fact, the 

amount of carbon removed as a consequence of ethanol production 

last year is the equivalent of taking about 9 million vehicles completely off the road. The program is working. 

Mr. WAXMAN. Dr. Martin, how does the RFS derive climate benefits? 

Mr. MARTIN. Well, my colleagues here have spoken to the current 

status. I would like to look to the future and say that the largest 

potential source of benefits from the RFS comes from the next generation of biofuels, where we have the opportunity to substantially—I mean, first of all, to see fuels with very low greenhouse 

gas impacts, including very good integration with agricultural systems so that we see less competition with food crops, but also it is 

both the reduction per gallon and the number of potential gallons, 

and because the scale that is available to make cellulosic biofuels 

97 

*The information has been retained in committee files and is also available at http:// 

docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=101184. 

is very large, the greenhouse gas mitigation potential is also very 

large. 

Mr. WAXMAN. Mr. McAdams and Mr. Dinneen, without the RFS, 

are we likely to see the investments we need to develop new lowcarbon renewable fuels in this country? 

Mr. DINNEEN. Sadly, no, you will not. And the consequences is 

without the RFS, you are going to see more oil production in this 

country and the—— 

Mr. WAXMAN. The—— 

Mr. DINNEEN [continuing]. Profile of oil is getting worse while 

biofuels is getting better. 

Mr. WAXMAN. OK. 

Mr. MCADAMS. It is the main driver for our industry. 

Mr. WAXMAN. There are concerns, however, that the RFS has 

some unintended consequences that may significantly reduce its climate benefits. For example, ramping up production of biodiesel 

may boost palm oil production. 

Dr. Martin, could you please explain how large increases in the 

demand for advanced biodiesel could drive further production of 

palm oil, and what are the concerns about palm oil production? 

Mr. MARTIN. Yes. Thank you. So the—I think RFS allocates a 

different bucket with regard to—with some consideration of, you 

know, what is available underneath them. And the—you know, biodiesel is—you know, there are some sources of biodiesel that are 

very low carbon, but the scale that those resources are available 

are limited. So, for instance, when you make a biodiesel or a renewable diesel or renewable jet fuel out of waste animal fat, then 

this seems like a very good low-carbon fuel, but there are other 

users for that, and so if the scale of those mandates exceeds what 

is available in that market, people aren’t going to produce more 

chickens, because of that demand, and so you will end up driving 

more demand for vegetable oils. And the lowest-cost source of vegetable oil coming into the global market is palm oil, and so that is 

the basic concern. 

Mr. WAXMAN. And palm oil production is linked to severe deforestation, land degradation and habitat destruction abroad and increases carbon pollution. Is that right? 

Mr. MARTIN. Yes, that is absolutely right. 

Mr. WAXMAN. I would like to enter into the record a statement 

from the Clean Air Task Force on this point, Mr. Chairman. 

Mr. WHITFIELD. Without objection. *

Mr. WAXMAN. As we consider any changes to the RFS, we need 

to think about how to minimize unintended consequences and assure that we are actually getting the promised climate benefits. 

And there may be ways to structure the RFS to provide incentives 

for additional reductions in carbon pollution. 

When the RFS was amended in 2007, existing corn ethanol 

plants were grandfathered, exempting them from the law’s greenhouse gas requirements. These facilities produce most of the ethanol, and overall, the net effect of their fuel may be to increase carbon pollution, rather than reduce it. Some grandfathered facilities 

98 

have reduced their carbon pollution through operational changes, 

such as fuel switching from coal to natural gas, but there is no requirement for such improvements. 

Dr. Martin, do you think it would make sense to require all 

grandfathered facilities to improve their operations and reduce carbon pollution over time? 

Mr. MARTIN. Yes. Absolutely. And if—— 

Mr. WAXMAN. I only have a few seconds left. Even for the newer 

facilities that were not grandfathered, the standards to reduce carbon pollution are fairly limited. Once a facility produces a biofuel 

that meets the greenhouse gas requirements, the RFS does not give 

that facility any incentives to do better. 

Dr. Martin, would it also make sense for the RFS to encourage 

additional improvements, such as by giving additional credit to fuel 

producers that exceed the minimum emission requirements? Yes or 

no? 

Mr. MARTIN. Yes. 

Mr. WAXMAN. The renewable fuel standard is critical in developing next-generation low-carbon biofuels, but it appears that it 

could be improved to better achieve the intended climate benefits. 

Thank you, Mr. Chairman. 

Mr. WHITFIELD. The gentleman’s time has expired. At this time, 

I recognize the gentleman from Illinois, Mr. Shimkus, for 5 minutes. 

Mr. SHIMKUS. Thank you. I think we lost the mike on this side. 

Mr. WHITFIELD. Do we have anyone that is technically attuned? 

Mr. TERRY. Barton’s works. 

Mr. SHIMKUS. Imagine that. Oh, the irony. And I was all organized. So—he is a munchkin, too. 

All right. Thanks, gang. It is great to—it is great to be with you. 

So palm oil. That is a new one on me. Our diesel production is 

mostly soybeans, beef tallow and the like. 

And I think we will talk about biodiesel in the next panel, but 

other than the RIN fraud, which is being investigated, biodiesel 

really isn’t part of this debate. I think most people, it is dropped 

in, it is—there is no retail issues, it is across the market, and I just 

want to put that on the table. And that was kind of testified in the 

last hearing. 

So, folks, we could have had this hearing in January, and I 

would have gotten the same freaking answers out of you all in January that I got today. And so the point is, as Chairman Upton said, 

listen and be constructive. Maybe we are getting—we got your 

sides. We know what they are. That is not really being constructive, because we have some issues we have to address, and so we 

would respectfully request that you come in and be constructive, 

because I think if—as you are learning, as much as we are, because 

you are hearing the members ask questions; you don’t have enough 

for repeal. You do have enough for some reforms. So we better get 

in the room and get it done, which will help everyone. It will send 

the market signals to the next generation. It will keep the regular 

guys in. And it will address the price disparity, or I call it the risk 

premiums on the RINs, based upon producing something that is 

really not available or accessible at this time. 

99 

You all represent associations. And the members of your associations are not in line with your opening statements when they come 

in individually and talk to us. So, good for you guys for toeing the 

party line. We have to find, and we are committed to move on a 

fix, and it would be helpful for you all to start negotiating in good 

faith to get this done, because as the media was successful in reporting last time, I have got two refineries in and around my district. I have got ethanol refineries all over southern Illinois. I have 

got as much corn as you want. I have got crude oil production. I 

have got fracking. I have got it all, and I am standing squarely 

with a foot in both bodies, and it is my goal and desire to get to 

a solution that benefits us all, not one side over the other. 

So let me go to the crux of the—and I think I lost it when I 

moved over here—the—so we have advocation of the repeal of the 

RFS. I think that has been clearly stated today. Obviously, my 

friends in the RFS are saying don’t do anything. 

Can I get you all to commit to at least exploring something that 

is in between, in between full repeal and keeping as in with no 

change? Can I get you all to say, we are going to meet with you 

and try to make this happen? You can do yes or no or answer a 

question, but I would like to go down the table. I would like to 

start with Mr. Gerard. 

Mr. GERARD. Mr. Shimkus, I think you know we will work with 

you always, and we are happy to have those conversations. Let me 

make one brief point, if I can. 

Mr. SHIMKUS. Be brief. I have got a minute left. 

Mr. GERARD. I will hurry. First is, though, the reason we call for 

repeal first and foremost is this statute is fundamentally broken. 

It is not working. It is—— 

Mr. SHIMKUS. OK. We are back to the same thing, because now 

Bob is going to say it is perfect. 

So, Bob, would you work with us? Jack, I don’t—no. 

Mr. GERARD. We will work with you—— 

Mr. SHIMKUS. No. Jack—— 

Mr. GERARD [continuing]. But let’s address the question—— 

Mr. SHIMKUS. No, Jack. 

All right. Bob? 

Mr. DINNEEN. I believe to the extent that there are issues associated with the RFS, and I will acknowledge that there are some concerns that need to be addressed, they can be addressed administratively, but I would like to work with you to determine how we can 

make that happen. 

Mr. SHIMKUS. OK. Charlie. 

Mr. DREVNA. Absolutely, Congressman. If we all agree what the 

facts are and not what the bombast is. 

Mr. SHIMKUS. Well, that is—— 

Mr. TERRY. That means no. 

Mr. SHIMKUS. OK. 

Mr. McAdams. 

Mr. MCADAMS. We recognize our—maybe if they recognize it is 

the committee’s jurisdiction and legislative authority, we would 

welcome the opportunity to work with you. 

100 

Mr. SHIMKUS. And, Dr. Martin, I don’t have to—I mean, you can 

chime in if you want. I mean, you would be willing to help, I am 

sure. 

Mr. MARTIN. Absolutely. Happy to help. 

Mr. SHIMKUS. OK. But let me end on this premise, the government has established by law, and you have all heard me say this 

before, procedures to refine either traditional or next generation. 

We have moved, because of our Federal law position, have moved 

capital into these positions. 

You all can’t advocate us repealing a thing that shareholders 

would lose billions of dollars and that the promise of the investment made by Mr. McAdams in future cellulosic, that we walk 

away from a government-mandated law that moved capital in these 

refineries. 

You are not advocating that we walk away from that and cause 

them to lose their private sector investment? Would—Jack, you 

wouldn’t want us to do that to the refinery sector. 

Mr. GERARD. No, we wouldn’t, but what I would suggest, the second part of what I was going to say earlier is we need to define 

what it is we are trying to accomplish. 

For example, when Mr. Waxman was asking questions about carbon emissions, he asked the future, particularly from the people 

that Mr. McAdams represents, they are much less carbon-intensive 

than some of the other fuels. However, the National Academy of 

Science points out that the current corn-based ethanol we are producing is more greenhouse gas—— 

Mr. SHIMKUS. All right. Let me stop you. My time’s expired. Let 

me just go back to say you all need to come to the room, because 

if you keep these positions, no one is going to be happy and 

nothing’s going to get done. 

I yield back my time. 

Mr. WHITFIELD. The gentleman’s time has expired. 

And we are happy to know that all of you are going to graciously 

come and work with us on this issue. 

At this time, I recognize the gentlelady from California, Ms. 

Capps, for 5 minutes. Not you? OK. Who is it? Who is it? 

Mr. GREEN. Me. 

Mr. WHITFIELD. OK. Mr. Green from Texas, you are recognized 

for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. 

Although I would defer to my colleague from California, but I 

just love following my colleague from Illinois. Congressman 

Shimkus and I are good friends and over the years, but we also understand we come from different geographical locations. 

And I am frustrated as anybody else with the RFS, and I voted 

for it in 2007. A number of us from my part of the country did, but 

what we have seen in the last number of years is, whether either 

with the RINs fraud, the gaming of the system, and I think some 

of us have gotten to the point where if we are going to have an 

RFS, it only should deal with things that are not edible. And I 

know that is some concern with Bob and your group. Corn and soybeans, obviously, you can raise the prices for everything. And coming from Texas, I first realized the problem was back in 2007 or 

2008, and I got calls from all my neighbors saying our deer corn 

101 

went up, whey they were buying it in October to fill up their deer 

feeders. 

So there needs to be—and I agree with my colleague from Illinois. I would probably vote for repeal of the RFS, but I just don’t 

see where we are going to get there, but we need to see what we 

can do to make sure it is quality. 

And a lot of people know I represent a lot of oil-based refineries, 

but I also have some biofuel facilities that are relatively small. And 

we actually have one that reopened because of market conditions 

and things like that, but I would like to sit down with that group 

in the room and see what we could do to make it workable. 

But let me ask a few questions before my time runs out. 

Mr. Gerard, can you tell me more about the Coordinating Research Council on the E15? 

Mr. GERARD. Yes. The Coordinating Research Council is an institution, collaboration, if you will, research, to retest fuels, particularly in automobiles. It has been around since 1942. And we have 

come together over time, collaborated with government, particularly DOE and EPA, to test the potential impacts on the fleet, if 

you will, from bringing new fuels into the marketplace. 

Most recently, and the reason this probably came up, is we have 

tested the E15. And what it concluded after testing on a few models, after designing the test program with EPA and DOE, I might 

add at their direction originally, we have found that it has significant impact. And as all the auto makers have now indicated, they 

will not warranty their cars under E15 and the current existing 

fleet. 

Mr. GREEN. The EPA and the DOE were aware of this research? 

Mr. GERARD. They participated in it. In fact, in about 2006 and 

2007, they helped us devise it. And the testing that we did was actually—part of the creation came from the EPA and what they felt 

needed to be tested to look at these questions. 

Mr. GREEN. OK. 

Mr. DINNEEN. Congressman, might I suggest—— 

Mr. GREEN. Well, let me ask you a question, and you might be 

able to answer it any way you want. You stated in the public documents that oil companies have blatantly ignored the law and refused for more than 5 years to make any meaningful investments 

in infrastructure would allow the sales of E85 or blends above E10. 

Can you respond to the type of investments in renewable fuels that 

oil and natural gas has made? 

Mr. DINNEEN. Sure. But, first, on the CRC test, I would ask that 

DOE’s critique of that test be included in the record, because they 

had a great number of problems with the test fuels that we used. 

They were not indicative of what is out in the marketplace. And, 

in fact, one of the vehicles that failed actually failed on nothing but 

straight gasoline. So if you are going to live by that test, maybe we 

ought not be using gasoline in this country. 

Mr. GREEN. OK. 

Mr. DINNEEN. With respect to the investments that the oil companies have made, frankly, they have made precious little, but 

more importantly, they have prevented gasoline marketers from 

making those investments and offering fuels to consumers. For example, Phillips 66 has a franchise in Kansas, ARCO 66, that for 

102 

years had been offering E85, and Phillips 66 was OK with that, 

and it was an important part of his business. He then wanted to 

offer E15 and did. He was the very first E15 marketer in the country. 

Mr. GREEN. OK. 

Mr. DINNEEN. And Phillips wasn’t OK with that. 

Mr. GREEN. I am going to run out of time unless I get a 

chance—— 

Mr. DINNEEN. So what they did is they changed their franchise 

agreement—— 

Mr. GREEN. Let me ask a question. 

Mr. DINNEEN [continuing]. To prevent that from happening. 

Mr. GREEN. Let me ask, Mr. Gerard, if Congress were to cap ethanol blending at 10 percent and match the cellulosic requirement 

with the progress of the technology, how would you respond and 

API respond? 

Mr. GERARD. Well, we would have to look at how you do that in 

order to the fuel mix across the country. We are happy to work 

with you on that. 

If I could respond quickly, the oil and natural gas industry are 

the leading investors in zero-carbon-emitting and low-carbon-emitting technologies. From 2000 to 2010, the Federal Government 

spent $43 billion in this area. We spent $71 billion. The rest of all 

the private sector spent 74. We are leaders. We are trying to find 

the breakthrough in technologies. What the RFS attempts to do is 

mandate technological change, and it has now demonstrated that 

you can’t do that with statute. 

Mr. GREEN. Well, Mr. Chairman, I know I am out of time, and 

I wish I had more time for the whole panel, because we have a 

bunch of questions. 

Mr. WHITFIELD. The gentleman’s time has expired. At this time, 

I will recognize the gentleman from Nebraska, Mr. Terry, for 5 

minutes. 

Mr. TERRY. Thank you, Mr. Chairman. 

And I want to associate myself with Mr. Shimkus’s statement. It 

has been frustrating to just hear the same old entrenched, ‘‘you are 

either in or you are out,’’ ‘‘nothing needs to be fixed,’’ ‘‘it is either 

totally right or totally wrong.’’ So it doesn’t leave us a lot of options 

here for this committee to look at if that is where we are. 

Now, I am interested in some of the more advanced biofuels. 

And, Mr. McAdams, I have been informed or told for over the last 

several months about exciting new advanced projects going to commercial state now. Could you give an update here? 

Mr. MCADAMS. Sure. Be happy to do that. 

Mr. TERRY. There are comments that there haven’t been any 

going commercial from pilot projects. So have there been? 

Mr. MCADAMS. I am happy to do that. Let me just take a myth 

off the table here. We have been able to hit the advanced biofuels 

numbers in 2011, in 2012, and we will hit them in 2013. It took 

the ethanol industry 20 years to produce the first 2 billion gallons, 

and in 2012, we delivered 2.25 billion gallons of advanced biofuels 

to the American public. Now, the largest portion of that 2.25 billion 

came from America’s biodiesel industry. That was 1.1 billion. And 

the way the statute works, it receives a 1.5 to 1 energy dense mulVerDate Nov 24 2008 12:30 Aug 05, 2014 Jkt 037690 PO 00000 Frm 00110 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-73 CHRIS
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tiplier. So if you can do the math, that is about 1.6 billion gallons 

that goes towards the 2.25 billion gallon target. 

Second myth I would like to take off the table is that Brazilian 

ethanol fills the bulk of the advanced biofuels pool. That is simply 

not correct. Because of the nesting requirements in the RFS, you 

have biodiesel and renewable diesel, its new little brother, coming 

online filling the bulk of that target. 

Just so the members understand the difference, renewable diesel 

is a pure hydrocarbon that hits the same exact ASTM spec as if 

you made it from a barrel of oil. That is what we flew the F–18’s 

on; that is the F–76 we put in the USS—— 

Mr. TERRY. Let me interrupt you there, because that was the 

next question I have. I have also read stories about aviation fuel 

as an advanced biofuel, that it is not just being used as an experimental fuel within the Navy or Air Force, but also in commercial. 

Can you update me? 

Mr. MCADAMS. I have had—I actually got to fly on the first flight 

from Seattle to Washington, D.C., last year. The first flight in the 

United States was a United flight from Houston to Chicago. One 

of my members has flown over 1,100 flights in Europe on a renewable jet fuel. 

We have a number of technologies that have given the gallons to 

the military and have been certified on most of the military air 

frames. And then we have the hope of alcohol-to-jet, which is now 

moving through the process. 

So, again, it is not just about cellulosic, it is about a whole variety of advanced technologies. We have one, two renewable diesel facilities in the State of Louisiana now that are running. We have 

several other smaller—— 

Mr. TERRY. Well, if you could submit the rest for the record, I 

would appreciate that. 

Mr. MCADAMS. Sure. I would be glad to do that. 

Mr. TERRY. So with my last minute 20, I want to ask, starting 

with Jack going to my right, I have been a supporter of biofuels, 

not just because I am from the Cornhusker State and that is economically important to Nebraska, but been a rabid supporter of a 

variety of fuels to offset imports. 

So, Mr. Gerard, Jack, if you could start, do we need diversity in 

our fuel portfolio? 

Mr. GERARD. Diversity is always good, as I mentioned to Mr. 

Rush. 

I would say what is happening today, of course, is we are providing more and more domestically, which is getting us off the foreign import question. 

Mr. TERRY. Is that a yes or a no? 

Mr. GERARD. Yes. Diversity is always good. 

Mr. TERRY. Sorry. 

Mr. DINNEEN. Yes, Congressman, it is critically important. And 

thank you for your leadership on this issue over the past several 

years. 

Mr. DREVNA. Diversity is always good as long as ago it has a 

positive impact on the consumer, including costs. 

Mr. MCADAMS. I practice it in my 401 every day. 

Mr. MARTIN. Yes. Absolutely. 

104 

Mr. TERRY. Thank you. 

I yield my time, yield back my 5 seconds. 

Mr. WHITFIELD. The gentleman’s time has expired. 

At this time I am recognize the gentlelady from California, Ms. 

Capps, for 5 minutes. 

Mrs. CAPPS. Thank you, Mr. Chairman, for holding this hearing. 

And I appreciate the witnesses’ testimony today. We all have a 

range of perspectives on RFS, but I hope we can agree on the importance of the policy’s primary goal to develop a cleaner, more sustainable fuel supply. Developing reliable renewable fuels were reduce our dependence on oil, much of it foreign, strengthen national 

security and create quality local jobs. 

There are a variety of Federal policies to help us move in that 

direction. Some are direct investments like tax incentives and research funding, and some, like the RFS, set public policy goals for 

private industry to work toward. I think both approaches play an 

important role of fostering growth of renewable fuels, but the RFS 

in particular is vital to creating some stability in an otherwise uncertain and volatile marketplace. 

As we know, some are calling for the complete repeal of RFS due 

to concerns about the ethanol blend wall. I agree there are some 

issues with RFS that do need to be addressed, but a complete repeal would have far-reaching negative impacts, going far beyond 

the blend wall. 

So I am going to ask Dr. Martin a couple of questions. You point 

out in your testimony that repealing RFS would lock in the status 

quo by more or less ending the development of advanced cellulosic 

biofuels. Can you elaborate on this? How would repealing the RFS 

impact our ability to develop viable new advanced fuel resources? 

Mr. MARTIN. Yes. Thank you very much. I think it has been mentioned several times that the investment in the next generation of 

biofuels really does rest on understanding what the goals of the 

fuel policy are and the objectives that we are trying to meet. The 

RFS sets those goals and the companies have made investments 

and are starting to produce fuel. 

I think something that sometimes gets lost in the sense of how 

much progress have we made, isn’t this a failure already, is that 

we have moved from laboratories to commercial production, and we 

have done that in a relatively short amount of time, but the fuel 

industry is enormous, and so the amount of time to go from one 

commercial facility to 16 billion gallons is, of necessity, will take 

some time. 

Mrs. CAPPS. Thank you. To continue, a key part of the RFS process is evaluating the total reductions in life cycle, greenhouse gas 

emissions for a given biofuel. In your testimony, you also state that 

the—and this is a quote from your testimony, the implementation 

of the RFS to date has had at best a limited positive impact on 

greenhouse gas emissions. 

Can you explain why this is the case and how increasing the use 

of cellulosic biofuels would impact this assessment? 

Mr. MARTIN. Right. Absolutely. We are very much looking to the 

RFS as a policy to reduce greenhouse gas emissions from the transportation sector and from fuels, but we think the biggest opportunity there is in the cellulosic biofuels and because of the competiVerDate Nov 24 2008 12:30 Aug 05, 2014 Jkt 037690 PO 00000 Frm 00112 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-73 CHRIS
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tion with food in particular. And so I think it makes a lot of sense 

that the RFS, after scaling up the biofuels that were available in 

the beginning of the policy, is shifting to other resources and we 

think that—and that is where the big opportunities are going forward. 

Mrs. CAPPS. One final question. I have a little time. And I see 

some others nodding, so if there is time to get a comment from others as well, but the RFS has played and will continue to play a critical role in accelerating the development and integration of advanced biofuels that we need in order to reduce our dependence on 

oil, but there is so much more that we can and should be doing. 

That is maybe the subject for another hearing. 

Dr. Martin, other than the RFS, what more could Congress be 

doing to accelerate the development of a cleaner, more sustainable 

fuel supply? 

Mr. MARTIN. Yes. Absolutely. I think there are a lot of opportunities outside of this policy, in particular in the Tax Code, because 

the delay in cellulosic has been all about investment, and certainly 

there are policies that could support more rapid investment. 

Mrs. CAPPS. Mr. McAdams or others, would you like to comment 

as well? 

Mr. MCADAMS. I wholly agree. The Tax Code has several options 

that would be very helpful. That is an area to look at. 

Mr. DREVNA. Congresswoman Capps, the advanced biofuels, I 

think we have to differentiate on the cellulosic. What is—what is 

cellulosic ethanol, we are still going to have the 10 percent blend 

wall, with cellulosic drop-in biofuels that my industry is doing a lot 

of research on, so we are having this cross-section of definitions 

here, but all cellulosic is not cellulosic. The ethanol, we are still 

going to have the 10 percent blend wall, the cellulosic drop in 

biofuels are still years away. 

Mrs. CAPPS. Any other comment? 

Mr. MCADAMS. Ms. Capps, I am going to send Mr. Drevna some 

of the drop in gasoline made from pine trees so he has got some. 

Mrs. CAPPS. There you go. 

Mr. GERARD. Ms. Capps, I would suggest maybe this might be a 

way—an area that you might look at for those who are looking for 

the middle ground. As Mr. McAdams said, cellulosic and advanced 

in those areas, which are less greenhouse intensive, versus what 

we have today. If you look at the E10 blend wall we have today, 

driven heavily by corn ethanol, which is driving us to that brink, 

that is why we argue we should repeal that, and then if we want 

to look at another agenda or another policy down the road, those 

are the areas we should look at. 

I think, as Mr. McAdams said, when you look at the advanced 

fuels that are still way down the road, there might be a better way 

to do this than have a mandate like the RFS that brings us to the 

point of crisis and has very adverse impacts on consumers. 

Mr. WHITFIELD. The gentlelady’s time has expired. At this time, 

I recognize the gentleman from Texas, Mr. Olson, for 5 minutes. 

Mr. OLSON. I thank the chair and I thank the panelists for joining us this morning. This issue is slightly controversial, with some 

passion. That is a little attempt at some humor, something I 

learned from the ultimate Texas humorist, William Philip Graham, 

106 

otherwise known as United States Senator Phil Graham, who I 

worked for 4 years. And Phil Graham always taught me to seek the 

truth, and he said, by something very simply, Boy, facts are a little 

persistent ‘‘thangs.’’ And that is a crummy Georgia-Texas, accent, 

but that is what I am here to do today, is find out the facts. 

Here are the facts I took away from the discussion of last 

month’s hearing before this committee. The RFS was designed for 

a U.S. energy future that no longer exists, that of a peak oil and 

increasing gas demand. The mandate will be met this year by 

using most of the older excess credits in the system. In future 

years, if unchanged, will be much more difficult. Compliance costs 

are spiking, especially for small refiners who don’t blend fuels and 

generate their own credits. 

The RFS has helped increase corn prices, and that has hit consumers back home, at Kroger’s, at Safeway and HEB, and, yes, at 

Wendy’s and even Whataburger. With all due respect to some of 

the panelists who said that there is not an impact on food prices, 

RFS does have that impact. Wendy’s came into my office a month 

ago, wanted to talk about Federal issues. You think they want to 

talk about Obamacare, increasing taxes, all sorts of things? No. 

They wanted to talk about RFS corn-based ethanol and how it has 

increased their cost of doing business. 

And I want to have a disclaimer, too. I am not, not opposed to 

corn farmers or ethanol. I have gotten blisters on my hands throwing a hoe in my uncle’s farm there in south central Wisconsin cutting down the weeds in his corn fields, so I know how important 

corn is in that part of the country. 

I do have some questions. I want to dig deeper on the RINs 

issue, so I have some questions for Mr. Gerard and Mr. Drevna, on 

its impact on small refineries. Large refineries, as we have seen, 

are able to generate many of their own RINs, however, many small 

refineries lack the distribution network and blending operations to 

do that. Can you please explain what this has meant for small refineries as RINs prices rise? 

Mr. GERARD. Well, thank you. Go ahead. 

Mr. DREVNA. OK. I am sorry. First of all, thank you, Congressman Olson, but I think that the issue is just—it transcends all refineries whether you are large or small, because not all refineries 

blend, not all refiners own blending facilities. Most do not. But it 

is a great question, because in response to your question, I can also 

comment on Mr. Shimkus’ thought about not wanting to take away 

investment and have people suffer in the marketplace. Back in— 

when the RIN prices first skyrocketed, when the market saw that 

there wouldn’t be enough RINs either for 2013 or 2014, they shot 

up at that time to a modest 60 cents. Huh. The refiners, the independent refiners lost $2.5 million of market capitalization in one 

day. So that is what this RIN thing has done. And that is over and 

above them having to pay for the cost. 

Last week, Bill Klesse, chairman and CEO of Valero, testified on 

the Senate side that Valero, a very large independent refinery, is 

going to be spending between $500 million and $700 million on 

RINs. And, oh, by the way, they are the third largest ethanol producer in the country. They produce more ethanol than 97 percent 

of the above-the-knees members. So that is the reality. This is a 

107 

market-skewering, economically disastrous kind of policy that 

needs to be addressed. 

Mr. OLSON. Mr. Gerard? 

Mr. GERARD. Mr. Olson, the impact on whether they are small 

or large is fundamentally the same. Let me bring us back to the 

focus. The real culprit here is the E10 blend wall. Charlie and others have mentioned for many years, those RINs were in the 2 cent 

to 3 cent range, and it wasn’t a concern. 

What has happened is the markets are seeing the mandate 

under the renewable fuel standard and say, we are going to force 

you or mandate you through to essentially where we have options 

to either create an unsafe fuel, but the auto manufacturers say, we 

are not going to warranty our cars if you do that, or go to fuels like 

E85, where consumers are already telling us they don’t want to buy 

the fuel. Why? Because it has less energy content in it. There is 

about one-third less energy in a gallon of ethanol than there is in 

a gallon of gas. 

So when you look at the price differentials, the cost of pure ethanol has always been higher than a gallon of gasoline. Consumers 

are figuring this out. That is why even with flex-fuel vehicles, they 

are not buying E85, even though it is available. Minnesota is a 

good example. They have actually increased the number of filling 

stations in Minnesota, and the demand for E85 is going down. Consumers understand it is all about energy; it is what you have to 

pay for to get from point A to point B. 

Mr. WHITFIELD. The gentleman’s time has expired. 

Mr. OLSON. Yes. I am sorry, Mr. Dinneen. My time—— 

Mr. DINNEEN. I thought the search for the truth would include 

both sides. 

Mr. OLSON. Well, I mean, the chairman’s got the gavel there, 

so—— 

Mr. WHITFIELD. At this time, I recognize the gentlelady from 

Florida, Ms. Castor, for 5 minutes. 

Ms. CASTOR. Well, thank you, Mr. Chairman. 

And thank you to all the witnesses for your testimony today. 

I am certainly open to some reform of the RFS, but there are 

some overriding issues that I think have to keep in mind. In 2007, 

the Congress updated the RFS with the explicit purpose of reducing carbon pollution from the transportation sectors. The Congress 

at that time was looking for different strategy among different sectors of the American economy. The Congress said, here in the 

transportation sector, we have got to reduce greenhouse gases 

being generated in the sector and also to help Americans across the 

country avoid the impending high costs that are being brought 

about by climate change. 

So the two primary ways in which the RFS aims to deliver these 

reductions are in the mandate for advanced biofuels, which must 

cut carbon pollution by at least 50 percent on a lifecycle basis, compared to petroleum fuels, and the mandate for cellulosic biofuels, 

which must cut carbon pollution by at least 60 percent. I know 

Congresswoman Capps was able to ask Dr. Martin about the greenhouse gases. 

Mr. McAdams, what role do you see—how is it going? Are we 

really achieving the targets that we have set? You represent many 

108 

of the companies that are developing and producing these advanced 

and cellulosic biofuels. What kind of greenhouse gas reductions are 

we actually seeing? 

Mr. MCADAMS. Well, by law, all of my members have to deliver 

a 50 percent greenhouse gas reduction over a 2005 baseline gasoline or diesel standard. And we delivered 2.25 billion gallons last 

year. And when you think about that—and the rules of the RFS 

were not even implemented until July of 2010. I defy anybody to 

say to stand up an entire industry in less than 3 years is a pretty 

decent performance, and we are probably going to be at 2.75 billion 

this year or above and over 3 next year. So we have done very well 

in the diversity of technologies that are coming online. These were 

all new, innovative technologies. This is—unlike the oil industry, 

who has depreciated their refineries, because they haven’t built one 

in the last 40 years, my members have built three new refineries 

in the last 18 months. That is a heck of an accomplishment for 

America, and that diversifies our portfolio. So I am proud of the 

progress we are making, and you will see a lot more between now 

and 2016. 

Ms. CASTOR. Well, I do believe they are replacing a significant 

quantity of petroleum with these low-carbon biofuels could result 

in climate change benefits and help. And the cost equation, you 

have to think about it on both sides. And coming from the State 

of Florida, I am particularly sensitive to this, because we are asking local taxpayers now to fund plans to address sea level rise, 

what is happening to our infrastructure along the coast. And unless we have some provable, evidence-based strategies going forward, we are just going to flail around and probably waste a lot 

more money. 

The development of cellulosic biofuels, however, hasn’t been as 

quick as Congress wanted. We are impatient. Plus corn is problematic. Is it raising food costs? Based upon what I am hearing from 

folks back home, they certainly believe so and they are providing 

evidence to back that up. 

Last year, however, we saw the first cellulosic gallons produced 

in the U.S. The Energy Information Administration predicts the 

sector will grow substantially in the coming years. 

Mr. McAdams, as I said, we are impatient. What else can we do? 

What else constructively in the RFS can we do to move this along? 

I know you talked about tax benefits, but this is the Energy and 

Commerce Committee and not Ways and Means. And if we are 

going to draft any legislation, what should it include? 

Mr. MCADAMS. Well, one of the things I would encourage you to 

consider is the point that Dr. Martin referred to, which is, from a 

performance-based standard, we have many companies that build 

a fuel now that exceed the 50 percent threshold. Yet, under the 

RFS, it is just a 55-mile-per-hour line. They don’t get any extra 

credit for it. You could actually see companies that have facilities 

that are less than the 50 percent threshold that might be encouraged to make further upgrades, like combined heat and power or 

switch their fuel sources to natural gas, that would actually increase their GHG coefficient if they were to get something for it, 

which would encourage them to do that. That is not currently in 

the RFS. 

109 

Ms. CASTOR. OK. And, Dr. Martin, I think you mentioned a new 

Florida company that has come online. Could you reference that for 

me, please? 

Mr. MARTIN. Absolutely. I had a chance last year to visit the 

INEOS refinery in Vero Beach. And they are starting up a process 

using vegetative waste that would otherwise be headed to the landfill to make not just biofuel but also renewable energy. So it is really exciting to see these commercial facilities come up. And when 

you understand the time frame that that went from a laboratory 

to a pilot plant to commercial production, I think it is hard for 

them sometimes to understand—if you only look at the number, 

like how quickly is it going to be half of gasoline production, you 

miss these huge improvements as you go from, you know, milliliters to gallons to 1,000 gallons to 1 million gallons to 10 million 

gallons. We need to get to 10 billion or more gallons. But we have 

made tremendous progress to get to where we are now. 

Ms. CASTOR. Thank you very much. 

Mr. WHITFIELD. The gentlelady’s time has expired. 

At this time, I recognize the gentleman from Colorado, Mr. Gardner, for 5 minutes. 

Mr. GARDNER. Thank you, Mr. Chairman. And thank you for convening this hearing on a very important issue for my congressional 

district. 

The Fourth Congressional District of Colorado is the 11th leading 

agricultural district out of the 435 districts in Congress. We have 

corn growers. In fact, my home county has in the not-too-distant 

past been the number two or number three corn-producing county 

in the United States. And we produce livestock, the fifth largest 

cow calf operation in the country. We boast thriving oil and gas 

production. In fact, the State of Colorado ranks fifth in the United 

States in terms of natural gas production. Many of the groups who 

are represented here today and tomorrow do have different opinions regarding the Renewable Fuel Standard. And I thank the committee for what is a deliberative and systematic process in this debate. And I appreciate the witnesses for being here today. 

So I will first direct my questions to Mr. McAdams. You discussed a need for certainty for investors and makers of advanced 

biofuels. I have an ethanol plant currently in my district that is 

looking to make cellulosic ethanol from bark beetle-killed wood. 

How would the development of this project be impacted if Congress 

made changes to the RFS? 

Mr. MCADAMS. I addressed that directly, Congressman, in my 

opening statement. The largest single problem we have is certainty. Both in the Tax Code, where the provisions are on one year 

and off another year and now in the debate as to whether we are 

going to repeal the RFS or not repeal the RFS. 

Mr. GARDNER. Affecting your investors? 

Mr. MCADAMS. It is the number one concern of the CEOs that 

I represent. 

Mr. GARDNER. In your testimony, you discuss short-term solutions to issues raised today that would give EPA more flexibility. 

Do you believe Congress can fix this problem and give the EPA the 

flexibility it needs? 

110 

Mr. MCADAMS. I am unclear as to whether they can. But I know 

that the EPA, because I have spoken to them on a consistent basis, 

is trying to deal with this RVO issue in the short term. 

Mr. GARDNER. Do you think they have the authority make 

changes within the RFS currently? 

Mr. MCADAMS. Yes, sir, I do. 

Mr. GARDNER. To Mr. Dinneen, we are going to hear tomorrow 

from representatives—and I will give you a little time to respond 

to the comments made earlier. We are going to hear tomorrow from 

representatives of the livestock industry. As someone who hails 

from an agricultural district, I represent both the farm side and 

the ranching side. Can you discuss how the coproduct from ethanol 

production distiller’s grain, how they impact livestock operations? 

Mr. DINNEEN. Thank you very much, Congressman. Absolutely. 

We are only using the starch in the production of ethanol. What 

is left behind is a very high-protein, high-quality feed that is then 

going to poultry and livestock markets across this country and, indeed, across the globe. In fact, the amount of DDG, distillers’ dry 

grains, that our industry produced last year is enough to produce 

the hamburgers to give everybody a quarter pounder a day for the 

next 8 months. 

Mr. GARDNER. And I will ask a similar question at tomorrow’s 

hearing with that panel because we have got group that is on the 

opposite side of that question tomorrow. How would you respond to 

the issue of higher feed and operating costs? 

Mr. DINNEEN. Well, look, one of the reasons that the RFS was 

passed was to stimulate economic opportunity across rural America; $2 corn was not sustainable. And the Congress was having to 

pay farmers not to grow. What they wanted was a value-added 

market for farmers. One of the purposes of the RFS was to increase 

farm income, increase the price of corn. And it has done that. And 

as a consequence, this Congress can now contemplate a farm program that is significantly different than what you otherwise would 

do. And farmers are getting more of their income from the marketplace, not from the mailbox. And that is a good thing. But even so, 

our industry is using less than 3 percent of the world’s grain supplies and none of its food grains—like rice or wheat. So we think 

that the impact on food is negligible to nothing. 

Mr. GARDNER. I will give you a couple additional seconds if you 

want to respond to comments made earlier because I do have some 

questions for Mr. Gerard. 

Mr. DINNEEN. I appreciate that. 

Earlier, the issue was whether or not small refiners or large refiners that don’t have downstream blending opportunity, they can’t 

get the ranch. Well, we sell a lot of ethanol to major refiners. But 

regardless, these companies have more market power than anybody 

in the universe. And in their contract negotiations, they can make 

sure that the RINs are returned to them for ethanol that is blended 

with gallons that they are providing. And for Valero in particular, 

the third-largest RIN producer in the country, if they can’t find 

RINs, they have got a problem. But that problem is not with the 

RFS. That problem is with their own internal operations. It isn’t 

doing what it can to capture the RINs that it is producing. 

Mr. GARDNER. Thank you, Mr. Dinneen. 

111 

Mr. Gerard, I am going to ask two quick questions. We may not 

have time to get to them. Can you discuss how you believe RINs 

translate to consumer costs. And number two, outline the risks you 

see associated as you have done so with blending higher volumes 

of ethanol in your opinion. 

Mr. GERARD. Great question. I will try to be brief here, but I 

would like to provide you a lot of material. 

EPRINC just did a study and released it a couple of days ago 

which pointed out that they believe because of the E10 blend 

wall—keep in mind that is the culprit here that drives the RIN 

price increase. Because of the E10 blend wall, when companies like 

ours, obligated parties, now try to comply with the Renewable Fuel 

Standard, it is arbitrarily and unfortunately driving up those costs. 

So when we try to comply, we have very few options. We can go 

out and quit producing, which we are trying to avoid doing. We can 

produce the fuel if the auto manufacturer says don’t put it in our 

cars; and by the way, we have liability if we do for not having the 

appropriate product. Or we can try to push a larger blend, an E85 

blend which the market has already shown won’t take. What this 

report concluded is it shows over the next couple of years this will 

drive the cost of gasoline from 20 cents to $1 a gallon. That is just 

one of three reports we have. The Wall Street Journal editorial last 

Saturday said, they expect it will drive the cost of gasoline at least 

10 cents a gallon and will cost the economy $14 billion. 

The real injustice here, this is all avoidable. We can address this 

question if we will deal with the E10 blend wall and make sure 

that mandate is taken away. And that is why we support repeal. 

This law is fundamentally broken. And it is driving us to the brink 

of crisis for no reason other than the fact that we just haven’t dealt 

with it. 

Mr. GARDNER. Thank you, Mr. Chairman. 

Mr. WHITFIELD. The gentleman’s time has expired. 

At this time, I recognize the gentleman from New York, Mr. 

Engel, for 5 minutes. 

Mr. ENGEL. Thank you very much, Mr. Chairman. 

I am very pleased that we are holding these hearings on the Renewable Fuel Standard. A program as important as this should be 

reviewed by Congress and any possible issues addressed. I believe 

that the Renewable Fuel Standard is an important tool in promoting U.S. energy security, an issue that I have been promoting 

for several years. When it comes to the RFS, much has been said, 

both good and bad during the last hearing and in testimony today. 

However, I believe, it is important to remember that this program 

reduces our greenhouse emissions and reduces our dependence on 

foreign oil. And both of those are very important. I believe that the 

EPA has the authority to deal with issues discussed today, such as 

the so-called blend wall. And the levels of advanced biofuels that 

are mandated. It is also important to remember that many of these 

new technologies aren’t exactly new. So it is premature to judge 

their success or failure. There are things we can do to strengthen 

the RFS. I have recently introduced the Open Fuels Standard Act, 

which I believe is a complement to the RFS with my colleague from 

Florida Representative Ros-Lehtinen. This legislation would require auto manufacturers to build cars that can run on alternative 

112 

fuels. In addition to gasoline, it could include ethanol, methanol, 

natural gas, electricity, biodiesel, hydrogen, or some new technology. It would empower our consumers to make a choice about 

what fuel is best for them. I urge this panel to take up the Open 

Fuels Standard Act. 

Let me ask, Dr. Martin, in your statement, you spoke about the 

motivation behind the expansion of the RFS which was to cut U.S. 

oil consumption. I believe that the evidence shows it has moved the 

U.S. toward that goal. Can you speak to how adoption of the Open 

Fuels Act might help us toward furthering that goal? 

Mr. MARTIN. Certainly. I think reducing the use of oil is good for 

the country. And I guess I have heard in today’s discussion some 

comments that the predictions in 2007 were wrong. And because 

we are using less oil now than we were in 2007, I think it is important to note that that is a positive sign. That is good for the country. Using less oil is the solution to the problems that oil causes 

to our economy. With respect to the open fuels standard, I think 

we have had some discussions in the past with your staff, and we 

have some detailed concerns about the best way to provide incentives for vehicles that use more—that they use cleaner alternatives. 

And so I think we definitely support those goals. And I think our 

approach to cutting oil use is not just a biofuels approach but relies 

on, as the open fuels standard emphasizes, reducing oil use with 

better biofuels but also with electric vehicles and a later variety of 

technologies. 

So while we are happy to continue to work on details and the 

best way to implement that, I think is moving forward with oil-saving solutions across the economy is the right way to address the 

problems that oil causes. 

Mr. ENGEL. Thank you. I might also add that in the various Appropriations bills, I have gotten amendments in those bills which 

would implement the President’s executive order that in the Federal fleet of cars that they would all be flex-fuel cars. 

Let me ask you again, Mr.—— 

Well, let me ask Mr. McAdams or Mr. Dinneen, would either of 

you comment on how the increased ability of consumers to choose 

their fuel as they would with the adoption of the OFS would affect 

the so-called blend wall? And can either of you address how more 

consumer demand of biofuels would help the industry grow more 

quickly? 

Mr. MCADAMS. Well let me just make one comment, and I then 

will defer to Bob. 

A number of my members—in fact, the majority of my members 

actually make a drop in hydrocarbon molecules which doesn’t need 

an open fuel standard. It can compete directly with the hydrocarbon fuels today. So I will let Bob pick up the other piece. 

Mr. DINNEEN. Thank you, Congressman. 

We do support the open fuels standard, and we appreciate your 

leadership over the years on that issue. 

I will tell you that greater E85 sales is absolutely a way around 

the blend wall. The blend wall this year, as I testified to earlier, 

is less than tow-tenths of 1 percent of the U.S. gasoline market. 

You can meet that with greater E85 sales. If the 3,000-plus E85 

stations today were offering E85 and selling just 50,000 gallons a 

113 

month, we would meet that standard. And you can most certainly 

do that. 

Certainly, as the price of gasoline has increased and ethanol 

prices have been coming down, consumer use of E85 is increasing 

specifically. And I can give you some specific data from the State 

of Minnesota that has shown since May there has been a spike in 

E85 use because the economics today are just compelling. And that 

is ultimately what is going to move this market. 

Mr. ENGEL. Thank you. If you could get that to me, I would appreciate it. 

Thank you, Mr. Chairman. 

Mr. WHITFIELD. The gentleman’s time has expired. 

At this time, I recognize the gentleman from Kansas, Mr. 

Pompeo, for 5 minutes. 

Mr. POMPEO. Thank you, Mr. Chairman. Thank you all for being 

here today. There has been a lot of discussion about the RFS protecting investments or being good for a particular industry, corn 

growers, bad for cattle guys. It seems to me those are the wrong 

discussions. It seems to me this is about consumers, providing 

them the independent energy at the source that they demand and 

that they want. It seems like that ought to be everybody’s focus. 

A lot of nodding heads, but I haven’t heard much talk about it 

today. So I want to try to get to that. 

Mr. Gerard, a moment ago you said—but I will ask everyone to 

try to give me a yes or no. Yes or no, does the RFS today impact 

the cost of transportation energy for consumers in the marketplace 

today? 

Mr. Gerard. 

Mr. GERARD. It does. It clearly impacts it, but it is not in a downward fashion. 

Mr. POMPEO. You think it goes up. 

Mr. Dinneen. 

Mr. DINNEEN. Yes, it impacts it. 

And because ethanol is less expensive than gasoline, it is helping 

consumers today. 

Mr. DREVNA. I respond in the affirmative to what Jack said. 

Mr. MCADAMS. I think it is helping consumers because it is giving them a diversity of choice. 

Mr. MARTIN. It is having a limited but positive benefit at the 

present time. 

Mr. POMPEO. So you think it makes a gallon of gas cheaper? 

Mr. MARTIN. It is hard to say. I don’t have actually a specific 

analysis. 

Mr. POMPEO. And Mr. McAdams, you think it makes it more expensive. But you think it is worth it because of the diversity? 

Mr. MCADAMS. I think, over the long haul, the return on the investment is good. 

Mr. POMPEO. My question is today. If you drive up to a pump, 

is it costing you money—— 

Mr. MCADAMS [continuing]. Compete with today’s market. And 

my members are doing that. 

Mr. POMPEO. Mr. Drevna, one of the responses to the RFS potentially is that refiners will export products to solve this challenge 

114 

that they perceive, at least, with respect to RINs. Is there evidence 

of that happening already today? 

Mr. DREVNA. I am sorry. I didn’t catch the last part of the question. 

Mr. POMPEO. The question is about exports. The question is, is 

there evidence that refiners are exporting refined products today as 

a result of the RFS, that they would not have absent that? 

Mr. DREVNA. Right today, I can’t say definitively yes. But I can 

guarantee you, if this blend wall product isn’t solved, refiners are 

going to—they have a couple of options to address the RIN in a 

blend wall. One is to cut runs, which will limit the supply of gasoline and diesel overall; and two is to export more, which would also 

limit their obligation. Another thing you have to take into consideration is the import of either gasoline or gasoline product to be 

blended here in the United States. There is evidence that shipments of gasoline and gasoline components have made a u-turn to 

go somewhere else because of the high cost of those free RINs. 

Mr. POMPEO. Mr. McAdams, you talked about an F–18 you saw 

flying off the deck with this new and improved product. What did 

that cost compared to what it would have cost the taxpayer? 

Mr. MCADAMS. I am not familiar with the exact price. I would 

be happy to try to find out for you. 

Mr. POMPEO. If I am saying it is 10 or 15 times as much, would 

you dispute that? 

Mr. MCADAMS. I just don’t have the information. 

Mr. POMPEO. Thank you. 

If it was 10 or 15 times, would you still think it was a good idea? 

Mr. MCADAMS. Over the long frame and depending on the number of gallons, it might be a great bet. 

Mr. POMPEO. Mr. Dinneen, you talked about RINs being free. 

The gentleman who runs Valero said its RINs are going to cost 

$500 million. Why is he wrong? 

Mr. DINNEEN. Because he is the third largest ethanol—— 

Mr. POMPEO. But why is he wrong? I understand what he does. 

Why is he factually wrong? It is about facts. We are trying to create policy from facts. Tell me why he is wrong about what he is 

going to have to report under Sarbanes-Oxley next year for the cost 

of his RINs. 

Mr. DINNEEN. By regulation, ethanol producers have to give a 

RIN to the purchaser of the ethanol. So they are free. If they are 

out on the marketplace looking for RINs, looking for credits, it is 

because they have made a decision not to invest in E85 infrastructure, not to allow more ethanol to be used, and to go to the marketplace elsewhere. 

Mr. POMPEO. I want to get to that. I appreciate that. You said, 

it is because they hadn’t invested. Is there any lawful requirement 

for these companies to invest in this infrastructure? You posted on 

your blog—and I want to make sure I get the language exactly 

right, quote, ‘‘oil companies have blatantly ignored the law, refusing more than 5 years to make any meaningful investment in infrastructure that would allow the sale of E85 or blends above E10.’’ 

What law is it that they were violating in not making those investments? 

Mr. DINNEEN. Well, what they are ignoring—— 

115 

Mr. POMPEO. No, no. What law? I am just trying to figure out 

what statute, what U.S. Code. I assume it was a Federal law. What 

law did they violate? 

Mr. DINNEEN. The point is they are ignoring the RFS, which sent 

a very clear signal to everybody that we are going to be using more 

renewable fuels. The auto companies responded by producing more 

FFVs. Our ethanol responded by investing in new technologies. The 

oil companies responded by deciding not to allow consumers access 

to these other fuels. 

Mr. POMPEO. So many more questions, but Mr. Drevna, go. I will 

see if the chairman will bear with me. 

Mr. DREVNA. I have to respectfully disagree with Mr. Dinneen. 

We have no control over what the 95 percent of the independent 

gasoline operators do. It is up to them. It is up to them. If they 

want to make the investment to sell E85, which the consumers 

don’t want, have at it. If Mr. Dinneen’s members want to invest in 

E85 stations, my members would be more than willing to sell him 

the 15 percent gasoline. 

Mr. DINNEEN. The franchise agreements is how they control 

what is sold. And in Kansas, in particular, we have seen what they 

do. 

Mr. POMPEO. I know the story very well. Did any of those franchise agreements under penalty of death? Or did they enter those 

franchise agreements voluntarily, do you know? 

Mr. DINNEEN. I am not privy to the franchise agreements, but I 

wouldn’t say no to anything. All right? That is all I am saying. 

Mr. WHITFIELD. The gentleman’s time has expired. 

At this time, I recognize the gentleman from Texas Mr. Hall for 

5 minutes. 

Mr. HALL. I knew when Barton turned it off on Shimkus it would 

come back. And your suggestion that they instruct or inform and 

help us reform, Mr. Shimkus, is probably one reason he whacked 

it off. 

I am going to take a chance on that and ask some of the same 

questions that have been asked because just about everything has 

been covered. 

Mr. Drevna, in your talking points, I guess American Fuel & Petrochemical Manufacturers’ white paper is a good bit about the advanced biofuel shuffle. And I am told there is no difference between 

corn ethanol and sugarcane ethanol for fuel blending. The shuffle 

occurs only because of the RFS advanced biofuel requirement. So 

let me maybe go to Mr. McAdams if I might. And first, I want to 

thank the chairman for the hearing because I haven’t attended a 

more important hearing, a more divisive hearing, or a hearing 

where men like you five could get together and really give us some 

good work if you could get together in the future. There ought to 

be some answer to this other than the Congress having to make 

an answer. 

And how to proceed with RFS and issues with blend wall are 

very important to our energy future. I am not sure what our best 

path is right now where all of you come in. Hopefully, by the end 

of this hearing, we will have a better idea of how to move forward 

in the future. 

116 

So, Mr. McAdams, the blend wall, probably the most pressing 

concern to the renewable fuel standards and specifically an ethanol 

issue. But the RFS is designed to include advanced biofuels other 

than ethanol, including so-called, as some of you mentioned, the 

drop-in fuels that don’t contribute to the blend walls and, in fact, 

may be the solution to it. 

Mr. McAdams, are there currently any fuels being made that 

avoid the blend wall and take pressure off the use of ethanol? And 

are you concerned that unless the blend wall is addressed, it could 

sink the entire RFS, including the advanced biofuel provisions? Do 

you have that figure? 

Mr. MCADAMS. Thank you Chairman Hall. 

Let me first answer the question about the biofuels. Yes, there 

are a number of fuels that are drop-in biofuels that are currently 

being used in the D6 or the conventional pool. When you originally 

designed the RFS, I don’t think most of the folks in the committee 

understood that other fuels could be compliant with the D6 pool, 

which was originally set up for the ethanol industry. With the advent of the rise in the RIN price for the D6 pool, we have seen a 

number of renewable diesel gasolines and some biodiesels actually 

come into the D6 pool. If you take Mr. Dinneen’s testimony at his 

word that there is a 280 million gallon gap in terms of the number 

of gallons of gasoline to put the ethanol in, we may actually see 

100 million gallons of renewable diesel this year used in the State 

of California because the State of California wanted the enhanced 

greenhouse gas reduction of those fuels back out the blend wall 

issue to some degree. Now I am not suggesting to the committee 

it is the panacea moving forward as the size of the cellulosic number grows. 

But I do want everyone to be aware that there are a variety of 

flexible drop-in fuels that are now helping take the pressure off the 

blend wall. And yes, the blend wall issue has created a great 

firestorm, as you have witnessed today. And it is had a negative 

impact on my guys being able to build these innovative plants to 

find financing. 

Mr. HALL. Mr. Gerard, would you like to comment? 

Mr. GERARD. Yes, I would, Mr. Chairman. Thank you. 

What Mr. McAdams says is probably true and important. Let me 

just add, though, and I think we talked about this before the issue. 

It is an incremental pressure. And what I mean by that, it still 

doesn’t resolve the entire problem. Keep in mind the challenge we 

have with the blend wall today is only for this year. Next year, the 

volume goes up. The following year, the volume goes up yet again. 

And so this continues to escalate into the future. So while we are 

getting some incremental improvement in some biofuels and others, 

diesel, that is terrific. It is assisting, but none of it is sufficient to 

offset the pressure and the crisis we have in the blend wall. That 

is why we have got to come back and address the blend wall issue. 

Mr. HALL. Thank you for that. 

Mr. Drevna, I wish you would address the advanced biofuel shuffle, the import of sugarcane ethanol from Brazil and the exporting 

of corn ethanol from the U.S. to Brazil. What is happening and 

what ought to be done to fix this? And let me just say this because 

I think my time is probably almost gone. I know most of you there 

117 

that have invested and have built companies and are relying on a 

reasonable well-thought-out answer to this problem. You might feel 

like the button people felt when the zipper guy came along. But for 

your knowledge, the button companies are still going, and the zipper companies are all going together. So we need to work something that is satisfactory to all five of the folks you all represent 

there. That is a big job. 

And I will yield back my time. 

Mr. WHITFIELD. The gentleman yields back the balance of his 

time. 

It is time to recognize the gentleman from Louisiana, Dr. 

Cassidy, for 5 minutes. 

Mr. CASSIDY. Thank you. One of the advantages of going last is 

that you get to hear your colleagues and get a sense of where they 

are going. Some of you I know would like to totally repeal the RFS. 

But if Mr. Hall from Texas is saying that the buttons and the zippers are going to list, I am a little bit of a vote counter, and I don’t 

think that there are, frankly, votes to repeal it. It is not—because 

I have been kind of sounding my colleagues as they walk out to get 

a sense of it. 

Now, Mr. Gerard, you just suggested that—I am not committing 

you to searching for—I am a practical guy. So if we have got to 

come up with something that is going to keep the most deleterious 

effect of this from happening and if even Mr. Hall from Texas is 

going to say that we have to coexist, then I am going to kind of 

accept his lead and ask you guys, if there was something that we 

could do to at least ameliorate the negative effects. I gather we 

would start with the blend wall. Keep it from escalating. Can I just 

go down the line and ask each of you, if you can concede that there 

would be something that we could work on, what would that be? 

Mr. GERARD. Clearly, the blend wall is the crisis right now. I 

would suggest, Mr. Cassidy, that the first thing we have got to do 

is to define what we are trying to accomplish. What I mean by 

that, I hear conversations about greenhouse gases. I hear import 

reliance. I hear a variety of other things involved. I think we need 

to define it because fundamentally today, the market is very different than it was in 2007. 

Mr. CASSIDY. I accept that. As I listen to everybody and have 

read your testimony, it seems like the major concern that will keep 

all those guys voting against repeal would be greenhouse gases. 

Now I gather there is a confusion of experts on that. There just is. 

But also gather that for some folks, it is something which is going 

to be accepted as holy scripture, and they are not agnostic. 

Mr. GERARD. Well, if you look at the panel today, there might be 

a distinction between Mr. Dinneen and Mr. McAdams because the 

National Academy of Sciences has concluded that the corn-based 

ethanol—— 

Mr. CASSIDY. I accept that. I am a practical guy. And they are 

going to believe it no matter what. And there are going to be some 

others who, for some other reason, decide they want to stay with 

the renewable fuels standard. I am not arguing either side. I am 

just telling what you I have observed. So when we start with the 

blend wall, perhaps prevent the escalating sort of demands of it, 

is there anything else that you would suggest, Mr. Gerard? 

118 

Mr. GERARD. Well, I think we need to do that first, and then 

again, I would suggest we go back and look at the foundation of 

the fundamentals. What are we trying to do? 

Mr. CASSIDY. So walk down the aisle. 

Mr. DINNEEN. Congressman, as I indicated before, I will acknowledge that there are issues that need to be addressed. But I do believe strongly that EPA has the authority to address some of those 

issues. I, for example, believe that the agency ought to be looking 

at transparency in the RIN market. 

Mr. CASSIDY. Let me first say, our side doesn’t trust EPA, OK? 

And I think if there is some legislative vehicle that could give assurance to both, that might be preferable. We can argue for the 

world view which we would like to have. I am just listening to my 

colleagues and getting a sense of what the world view is up here. 

So aside from relying upon the beneficence of the EPA, what else 

would you suggest? 

Mr. DINNEEN. Well, the suggestion was that this blend wall is 

creating a crisis. I am a practical guy, too, Congressman. I just 

happen to believe that two-tenths of 1 percent of the U.S. gasoline 

market that is represented by the blend wall this year is not a crisis. And it can be addressed. 

Mr. CASSIDY. But it escalates, as the other panel has said. So 

even though we may be able to mitigate it this year, in subsequent 

years, it will become more difficult. And as your neighbor just 

pointed out, there may be tanks of gasoline going elsewhere. 

Mr. DINNEEN. The ethanol requirement increases by 600 million 

gallons—— 

Mr. CASSIDY. I feel like we are battling—— 

Let’s work down the aisle. 

Mr. DREVNA. Congressman, thank you. I think you have to look 

at what was anticipated, what were the directives, how they have 

played out, and a lot that hasn’t been talked about today and we 

tried to bring it up, what is the ultimate impact on the consumer? 

What is the ultimate impact on the overall American economy, not 

this segment or this segment or this segment. Look at the thing holistically. Is, has it worked? Where has it failed? 

Mr. CASSIDY. I accept that. I totally accept that. I think you have 

very compelling testimony. That said, I don’t think that we are 

going to repeal the RFS. And so, keeping in mind that our primary 

thing should be the working family of the United States of America, is there anything incrementally that we could do that could improve that? 

Mr. DREVNA. Well, incrementally, I don’t think if a problem is 

unworkable at its core or at its nucleus, that tinkering on the outer 

electrons isn’t going to get the job done. And that is why we are 

for repeal. And as Jack said earlier, you repeal it, we are still going 

to use 10 percent ethanol. Mike’s gang is still going to get advanced 

biofuels. We are we will progress, not digress. I have maintained, 

Congressman, if we keep this law as it is, we are going to digress. 

Mr. CASSIDY. Next? 

Mr. MCADAMS. I would say immediately the committee should in 

a bipartisan way send a letter to the EPA because it is of no loss 

to you. And call on them to immediately release the 2013 RVO. 

And I think you will be surprised you will actually see a decrease 

119 

in the cellulosic number from the preproposed rule. And ask them 

whether or not they could do the 2014 and 2015 framework by November 31. I would do that irrespective of what your decision is 

with respect to legislation. I think you should do both. 

Mr. CASSIDY. Dr. Martin? 

Mr. MARTIN. I think moving forward with flexibility and also recognizing that the pace of expansion of biofuels over the next few 

years is going to be lower but putting a complete halt to it or trying 

to put it in reverse is going to have a very negative consequence. 

So moving forward at a deliberate but not excessive rate is the best 

solution. 

Mr. CASSIDY. I yield back. Thank you. 

Mr. WHITFIELD. The gentleman’s time has expired. And there are 

no further questions for this panel. So I want to thank you all very 

much for—— 

I know it is frustrating for all of to you listen to the other side 

of the issue. But we look forward to working with you as we move 

forward to make some determination. 

Mr. RUSH. Mr. Chairman, I have one question that has been kind 

of percolating in my head. 

Can’t we all just get along? 

Mr. WHITFIELD. Why are you asking me that question? 

Well, listen, thank you all. And we do look forward to working 

with you. We appreciate your testimony. 

I would like to call up the second panel at this time: Mr. Tom 

Buis, who is CEO of Growth Energy; Mr. Joseph Petrowski, who 

is CEO of the Cumberland Group, on behalf of the Society of Independent Gasoline Marketers of America and the National Association of Convenient Stores. We have Mr. Shane Karr, vice president 

of Federal Government affairs, the Alliance of Automobile Manufacturers. We have Mr. Todd Teske, who is chairman and CEO of 

Briggs & Stratton. We have Mr. Robert Darbelnet, who is president 

and CEO of AAA. And we have Mr. Joe Jobe, who is the CEO of 

the National Biodiesel Board. 

So if you would all have a seat. We thank you for being with us 

today. Thank you all for joining us today. And we do look forward 

to your testimony because many of you are quite affected by this 

renewable fuels standard. And I am sure you have some practical 

thoughts and ideas about it. 

STATEMENTS OF TOM BUIS, CEO, GROWTH ENERGY; JOSEPH 

H. PETROWSKI, CEO, THE CUMBERLAND GULF GROUP, ON 

BEHALF OF SOCIETY OF INDEPENDENT GASOLINE MARKETERS OF AMERICA AND NATIONAL ASSOCIATION OF CONVENIENCE STORES; SHANE KARR, VICE PRESIDENT, FEDERAL 

GOVERNMENT AFFAIRS, THE ALLIANCE OF AUTOMOBILE 

MANUFACTURERS; TODD J. TESKE, CHAIRMAN AND CEO, 

BRIGGS & STRATTON CORPORATION; ROBERT DARBELNET, 

PRESIDENT AND CEO, AAA; AND JOE JOBE, CEO, NATIONAL 

BIODIESEL BOARD 

Mr. WHITFIELD. So Mr. Buis, we will recognize you first. 

Each one of you will be given 5 minutes. And on the table, there 

are a couple of boxes that will turn red when your 5 minutes is up. 

120 

So if you can stay within the time limit, we would appreciate it. 

We do have your testimony though. 

So, Mr. Buis, you are recognized for an opening statement for 5 

minutes. 

STATEMENT OF TOM BUIS 

Mr. BUIS. Thank you, Mr. Chairman. I appreciate the opportunity to testify, and I do appreciate—— 

Mr. WHITFIELD. Do you have your microphone on? 

Mr. BUIS. There we go. Thank you, Mr. Chairman and members 

of the subcommittee. I appreciate this opportunity to testify today. 

And I would ask that my written testimony and the charts and 

data that we have submitted be submitted into the record. 

Mr. WHITFIELD. So ordered. 

Mr. BUIS. Thank you very much. I am Tom Buis. I am CEO of 

Growth Energy. We represent 79 ethanol plants and 81 associate 

members and about 40,000 grassroots supporters at Growth Energy. Our plant members utilize grain, corn, and sorghum to make 

biofuels. But they have also invested very heavily in what we call 

next generation production, both cellulose. We have a plant that is 

currently under construction in Iowa that will use farm waste, corn 

stover to produce cellulosic ethanol that should be online the first 

of next year. 

We have another plant in Iowa that is actually capturing carbon 

from the corn ethanol plant and feeding it to algae bioreactors. 

That is about a 20-acre bioreactor process that can be seen there. 

And we have others that have invested in the use of woody biomass. 

So the first generation of ethanol producers, which we primarily 

represent, are all invested in next generation, both to meet the 

greenhouse gas emissions targets and the targets of the RFS. The 

RFS, in our opinion, is an overwhelming success. You know, it has 

injected much needed competition and consumer choice into the 

fuel markets. We are only a little over 5 years since the passage 

of that law and only 3 years since the rules were finalized. 

And already we are producing 10 percent of our Nation’s gasoline 

supply. It has lowered the price at the pump. It has created American jobs. It has revitalized rural America, including farm income. 

It has improved the environment and made our Nation more energy independent. 

Some want to see this policy fail, as we have heard today and 

elsewhere. But keep in mind not only are we producing 10 percent 

today in a very short period of time because of the RFS but we can 

do more in the future. With oil approaching $110 a barrel and gasoline nearing $4 a gallon, does anyone believe we don’t need a less 

expensive competitive alternative to oil? That was one of the purposes of the RFS originally. We have that competitive product 

today. 

And despite what some on the first panel have said, ethanol is 

the cheapest fuel in the world. We are 67 cents a gallon cheaper 

than clear gasoline. And even when they challenge or come back 

with the BTU unit, they are not counting the value of octane in the 

refining of that fuel. And our efficiency keeps improving. Energy 

121 

use and water use keep declining while yield and productivity is increasing from every pound of feedstock we use. 

Despite this data, some are trying to blame biofuels for driving 

up gas prices. It is just another scare tactic to try to eliminate 

what I consider the best energy law passed by Congress in the last 

40 years. RIN prices are not the cause of higher gas prices. There 

are 2.6 billion surplus RINs that can be used in the marketplace 

for this year. 

We are going to produce about 13 billion gallons of ethanol and 

biofuels. Last year, the same situation with a short crop and a 

short production, RIN prices were 2 or 3 cents a gallon. And we 

still had high gasoline prices. So all this doesn’t square. The real 

cause of higher gasoline prices and RIN prices is self-inflicted by 

the obligated parties who refuse to blend higher levels of ethanol. 

The real cause of higher gas prices is unrest in the Middle East, 

refinery outages, speculation, and increased demand. 

Ethanol’s competitive price is why Growth Energy led the way in 

asking the EPA to approve the use up to 15 percent ethanol fuel. 

That is how you break the blend law. That is how you solve all the 

controversy that we were hearing today. We could see it coming, 

Mr. Chairman. One of the reasons to go on to E15 is, even with 

the rosy scenario laid out in 2007 on fuel consumption, we were 

going to have to go to higher blends. That is why we filed it. That 

will allow the marketplace plenty of space for next generation 

biofuels. 

The RFS and the E15, as I just mentioned, go hand in hand. E15 

is the most tested fuel in the history of fuel changes. DOE performed a comprehensive test, using 86 different vehicles a total of 

6 million miles. They found no harm to emissions equipment and 

no issues with engine durability, the two requirements for granting 

a waiver under the Energy Independence and Security Act. 

By contrast, the CRC study that gets mentioned by our critics 

only tested eight vehicles, two of which had known engine issues. 

They did not test these engines on E10 and only tested three of the 

eight on ethanol-free gasoline and even one of those failed. It was 

a flawed test designed to make a political point to eliminate the 

cracking of the Berlin Wall. The E15 waiver is only approved for 

light duty vehicles built after 2001 and flex-fuel vehicles. It is not 

approved for off-road vehicles, small engines, motorcycles, or marine engines. In fact, it is illegal for those vehicles to use it, and 

it is stated so on the label that must be acquired on any station 

offering E15. The stations that have been offering E15, the results 

are pretty amazing. One of the myths that is perpetuated by the 

oil industry is that consumers don’t want higher blends. Well, how 

do they know if they have never been offered them? Where they 

have been offered them, we are seeing volumes go up significantly. 

In one case from a retailer that testified at a congressional briefing 

last week, his volumes quadrupled in a year. They have not had 

access to that marketplace. So let’s let the consumer have a choice. 

I would also add that over the past 2 and a half seasons, 

NASCAR, which has quite a bit of its reputation staked on the durability and performance of its race cars has put 4 million miles on 

those cars without a problem. They got increased horsepower and 

increased performance. 

122 

Mr. WHITFIELD. Mr. Buis, I have let you go over about 2 minutes. 

If you could summarize, please. 

Mr. BUIS. All right. I would like to summarize, Mr. Chairman, 

by saying that to repeal the RFS to me is unnecessary. To reform 

it is also unnecessary. We feel that there is enough flexibility within the law that all of these issues can be addressed. And if we want 

to get beyond the problem, let’s crack that blend wall. 

Mr. WHITFIELD. Thank you. 

[The prepared statement of Mr. Buis follows:] 

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Mr. WHITFIELD. Mr. Petrowski, you are recognized for 5 minutes. 

STATEMENT OF JOSEPH H. PETROWSKI 

Mr. PETROWSKI. Thank you, Mr. Chairman. 

I am Joe Petrowski, the CEO of the Cumberland Farms Gulf Oil 

Group. We deliver gas to 3,000 locations over 29 states. We operate 

almost 900 company owned and operated convenient stores in 13 

states. We are not a refiner. We are not a producer. We don’t have 

any investments in ethanol. We are out there dealing with the customers. We have over a million transactions a day selling fuel. All 

we want to do is sell the fuel that our customers want in a legal 

and lawful manner. And we do believe that it is demand that generates supply. We will sell what our customers want. 

Now I, too, don’t believe the RFS should be repealed. I think it 

has achieved much of what Congress intended which was a diversity of supply, a domestic source of fuel, and has, I believe, on balance brought down the price of fuel to the consumer. With RINs 

trading at $1.50, for a blender that is almost picking up 15 cents 

a gallon on a 10 percent blend and with ethanol at 60 cents under, 

that is another 6 cents; that is 20 cents a gallon. But with RINs 

at $1.50, we are subsidizing exports and taxing imports, which has 

an effect of increasing prices. Just recently, a refiner who bought 

a refinery in Hawaii announced that when they invested in the refinery and got product up to levels, they would export to China 

rather than California or use it locally really to generate the RINs 

because an exporter get that RIN and an importer has to pay that 

RIN. So there are some deficiencies in the RFS, which Congress 

could never have anticipated. Driving is down, which is somewhat 

a demographic—online shopping, an older population. CAFE standards are up, which was mandated by Congress and was done effectively. But we are using less fuel than we did when the law was 

first put in. You cannot mandate to pour 14 ounces of fluid into a 

12-ounce cup, which is essentially what we have done. Our suggestion is that the EPA in concert with the DOE set the standards of 

what should be blended forward, taking the realities of the marketplace. We think that is the right solution. 

We are also going forward going to have more alternate fuel vehicles. So we do believe—there are other things I would like to see 

Congress—and maybe this is discussion for another day. It is 

cheaper because of the 1920 Jones Act for product in Louisiana to 

be shipped to Venezuela and Mexico than it is to Boston or New 

Jersey. Along with getting the RIN for being an exporter, that is 

giving a great incentive as we ramp up domestic production and 

ethanol production that we are exporting the product rather than 

using it domestically to lower costs for consumers. 

If we have a bias at Cumberland Farms and Gulf Oil is we want 

lower energy prices for our customers because we have just noticed 

the discretionary spending in our stores is just much higher when 

the consumer is not spending it on fuel. So we might be rare 

among oil companies that we like lower oil prices. Now that is not 

altruism. It is the simple fact that we are not a producer or a refiner. We are a retailer. 

That is it, Mr. Chairman. I have used my time. 

Mr. WHITFIELD. Thank you very much. 

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[The prepared statement of Mr. Petrowski follows:] 

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Mr. WHITFIELD. Mr. Karr, you are recognized for 5 minutes. 

STATEMENT OF SHANE KARR 

Mr. KARR. Thank you, Chairman Whitfield, Ranking Member 

Rush, and members of the subcommittee. 

I really appreciate the opportunity to testify here today on behalf 

of the alliance and our 12 member companies. We represent companies headquartered all over the world that make roughly three out 

of every four new vehicles purchased each year, so a broad breadth 

of manufacturers representing a very sizable portion of the marketplace. 

We, first of all, want to say we appreciate the thoughtful review 

of the RFS, and we have responded to several of the white papers, 

as other stakeholders have, and think that this has been a great 

process. The alliance didn’t take a position on RFS II in 2007. And 

frankly, I can’t tell you how many gallons of renewables the market 

is going to produce by a date certain. Of course, neither can any 

of the other 15 witnesses that you are hearing from over the course 

of these 2 days. 

Frankly, we are all here because a number of the assumptions 

that were made in 2007 have proven inaccurate in 2013. And the 

first panel spent a lot of time talking about the decline in overall 

fuel use and the slow emergence of cellulosic biofuel. So I am not 

going to spend time on those. Rather, I would like to talk about another faulty assumption, if you will, and one that is actually embedded in the name of the standard. The assumption was that renewables would, in sufficient quantities, become a stand-alone alternative fuel. And it kind of went like this: Renewable producers 

would make billions of gallons and auto companies would make 

FFVs capable of running on fuel that was composed of 85 percent 

renewables and be sort of done and done. No blend wall issues, no 

compatibility problems. In the right vehicle, gasoline is largely displaced by a competitor that is almost all biofuel based, right? 

It was a great vision. It has proved to be totally wrong. 

Instead, the better way to think about biofuels might be as an 

additive. And that is not pejorative. It is just an attempt at an accurate description. It is effectively the tack that Growth Energy 

took when it petitioned EPA to increase the national blend from 

E10 to E15. To their credit, the producers were among the earliest 

to attempt to address the issue. 

But the fact is that even as an additive, implementation has 

turned out to be very complicated and problematic, as the witnesses at the table will attest. We can make vehicles that can run 

on virtually any fuel. So I want to emphasize that. But there are 

a lot of competing policy priorities that we have to navigate. 

So taking seriously Chairman Upton and Chairman Shimkus 

and Chairman Terry’s—there are a lot of chairmen—admonition to 

come to the table with something, I will say to you that these 

would be our key watch words for moving forward, how we should 

look at biofuels policy: 

One, prospectively, prospective, not retroactive policies with appropriate lead time for manufacturers. 

155 

Two, definitively, we need certainty about the fuel specs. The 

more precise the spec, the better we will be able to optimize all aspects of vehicle performance. 

Three, comprehensively. Making the fuels important and having 

vehicles that can use the fuel is important. But it turns out distribution is absolutely critical as well, and we seem to have forgotten about distribution in 2007. 

And finally, holistically. There are a number of ways to achieve 

energy security and our environmental goals. Biofuels are an important path, but they are just one. My members are giving consumers choices, and ultimately, the market will decide which one 

works. 

If there is a lesson in the last 5 years, it is that we should be 

humble about our ability to see the future and committed to working together to overcome the challenges that arise. We appreciate 

the opportunity to appear. And again, I want to reemphasize we 

are committed to working with the committee going forward. 

Mr. WHITFIELD. Thank you Mr. Karr. 

[The prepared statement of Mr. Karr follows:] 

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Mr. WHITFIELD. Mr. Teske, you are recognized for 5 minutes. 

STATEMENT OF TODD J. TESKE 

Mr. TESKE. Chairman Whitfield, Ranking Member Rush, and the 

distinguished members of the committee, thank you very much for 

soliciting our viewpoint on this. This is a very important issue for 

Briggs & Stratton. Briggs & Stratton is located in Milwaukee, Wisconsin. We are the world’s largest manufacturer of air-cooled gasoline engines that are used in outdoor power equipment. We also 

manufacture the same equipment. So we have knowledge, obviously, on the engine side and the application side under various 

brand names. We operate in about 100 countries. So we are global. 

We have 6,200 employees throughout the world, of which, most of 

them, 5,300, are here in the U.S. We are primarily a U.S.-based 

manufacturer. We have 85 percent of our manufacturing is done 

here in the U.S. And we are really proud to be celebrating our 

105th anniversary this year. 

I would like to first take the opportunity to commend the committee on their workmanlike efforts in terms of these issues. There 

are a lot of different issues we have been following. Obviously, the 

white papers that the committee has put out through the Outdoor 

Power Equipment Institute. I am currently chair of that group. But 

I really am here today on behalf of Briggs & Stratton to give you 

an idea of small engine manufacturers. And the issue isn’t just 

unique to Briggs. It applies to others in the industry as well, the 

issues that we have with the RFS and specifically with E15. 

I would also like to recognize the EPA. We have over the years 

worked an awful lot with the EPA in terms of emissions regulations. Their career employees are just very professional people, and 

we have found them to be fair and balanced as we go through finding regulations that both protect, obviously, the environment but 

also make sure that the consumer is protected along the way. 

So let me talk a little bit about the affect of ethanol on our engines. Our engines are currently designed to run on blends of E0, 

so zero percent ethanol, all the way up to E10. They are calibrated 

as such. The materials that we use will withstand E10. And when 

the partial waiver came out with regards to the EPA introducing 

E15 into the marketplace, they excluded offroad engines, which 

were excluded. So the EPA really recognizes that there is an issue 

with regards to our types of equipment. The problem is, it introduces the fuel into the marketplace. Part of the partial waiver also 

included a misfueling mandate that was out there to make sure 

that people don’t misfuel. Because I think the EPA recognized that, 

in fact, there will be misfueling. That can and will occur. 

So the issue along the way is when you get to E15—let me just 

give you a little bit of background when you get above E10. It degrades the engine components very quickly. And the engine itself 

will achieve premature failure. So our concern is really those consumers. There are 80 million engines out there in the U.S. today 

that Briggs & Stratton has made. And we want to make sure that 

those consumers get the value they deserve as we go along. So it 

is really the legacy equipment and also moving forward. 

So the misfueling, we anticipate—and there are a lot of studies 

that have been done that misfueling will occur. Currently, the 

165 

misfueling mandate really calls for a label on a pump. And we have 

all been to the pump and filled up our cars. There is a lot of information there and this small very small label is not going to deter 

someone from basically putting fuel in their 5 gallon can or the 2.5 

gallon can and taking it home and putting it in their piece of equipment, small engine. Also, when you look at it, studies have shown 

that because the cost, as we talked earlier today, the cost of ethanol, higher blends of ethanol is cheaper. People will migrate towards that fuel. There is also just simply a lack of knowledge out 

in the marketplace. Just yesterday I was talking with a CEO friend 

of mine in Milwaukee, and he was telling me about his boat. And 

I said you don’t put even E10 in your engine. He said E what? He 

doesn’t understand. The fact is, people don’t understand these 

things. They will misfuel. And it will lead to premature failure 

with regards to their engines. They will not get the value they 

need. 

So we at Briggs, we are not against renewable fuels at all. We 

believe renewable fuels are important. We want to make sure that 

there are renewable fuels that can be used in not only equipment 

that we make into the future but also equipment that we have 

made in the past that is out in the field, the legacy equipment. We 

are really very much for a drop-in fuels. We have tested isobutanol 

at our own expense. We have worked extensively with a company 

named Gevo in the past. We have found that the isobutanol as an 

example is a fuel that could be used as a drop-in fuel for our equipment, again, both legacy and going forward. 

We would suggest that the committee rescind E15, the partial 

waiver because there will be misfueling that will occur. 

And finally we would recommend at a minimum that the amount 

of ethanol that is blended into the national fuel supply be capped 

at 10 percent ethanol. So our engines can handle 10 percent. We 

would suggest you cap it at 10 percent. 

So, again, thank you very much for allowing us to be here. And 

we look forward to your questions. 

Mr. WHITFIELD. Mr. Teske, thanks very much for your testimony. 

[The prepared statement of Mr. Teske follows:] 

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Mr. WHITFIELD. Mr. Darbelnet, you are recognized for 5 minutes. 

STATEMENT OF ROBERT DARBELNET 

Mr. DARBELNET. Thank you. My name is Bob Darbelnet. I am 

president and CEO of AAA. 

Mr. WHITFIELD. Would you move it a little closer to you, Mr. 

Darbelnet? 

Thank you. 

Mr. DARBELNET. We represent 54 million motorists in North 

America and appreciate this opportunity to share with you our concerns both relative to the premature introduction of E15 and what 

I think, in due course, you are going to be required to do, and that 

is to adjust the RFS standard. 

But dealing with E15 first, we have—in our view, there are three 

prerequisites for the introduction of the new fuel. And the first one 

is that there be adequate testing to ensure safety. And in our view, 

that has not occurred. Granted, the EPA did extensive testing. But 

it was focused predominantly on emission controls. Industry testing, however, revealed real concerns, some of which have already 

been mentioned relative to premature engine wear and fuel pump 

failures. For that matter, even the Renewable Fuels Association, 

which is a great advocate for ethanol, advises retailers to be aware 

of the damage to their underground fuel systems that can be 

caused by E15. So if it is not safe for their tanks, it makes us wonder why it would be safe for our members’ tanks. 

The second requirement is that there be coordination between 

regulators, fuel retailers, and auto manufacturers. In our view, 

that has not occurred either. A number of the retailers are opposed 

to the sale of E15, and virtually all the significant auto manufacturers in this country have advised that E15 is incompatible with 

95 percent of the vehicles that are on America’s roads today. 

And then, the third requirement is that there be outreach to consumers to mitigate the risk of misfueling. And that has not occurred either. We did some polling recently that indicated, much to 

the point that Mr. Teske made, 95 percent of Americans don’t know 

what E15 is, let alone whether they ought to put it in their vehicle. 

And the EPA ceded to pressures to tone down that very small label 

that is required on pumps, such that it reads ‘‘attention’’ rather 

than ‘‘warning,’’ which might have been the more advisable term, 

albeit, as noted, it is unlikely that that small label—by about 3 

inches by 3 inches—is going to be detected in all the other messages that are on today’s pumps. If you pump your own gas, you 

know what I am referring to. 

But let me be clear, AAA is not opposed to the use of ethanol for 

automobiles. E15 is compatible with most vehicles, and it would 

allow for the reduction of our dependency on fossil fuel and offer 

motorists a choice as to what they purchase. So we are not opposed 

to ethanol. We are comfortable with E10. But we are certainly opposed to E15 under the current circumstances. 

Allowing it to continue to be sold is irresponsible, and in our 

view, it should cease until adequate testing allows for the regulators, the retailers, and the people who manufacture the cars to 

reconcile their views, agree on which vehicles it can safely be used 

for, and adequately inform consumers. 

175 

Now as to the issue, which I know you are quite interested in, 

which is what to do with the RFS, for the moment, we are not calling on you to revoke or even modify the RFS requirement. We do 

believe that you are going to find yourselves confronted with the 

obligation to make some adjustment. And we certainly believe that 

it should be adjusted if we find ourselves in a situation where the 

only way to achieve it is to allow the continued sale of E15. If that 

were the only way to meet the requirement for 2014, it would definitely need to be adjusted, and I commend you for addressing this 

issue before it becomes much larger than it already is. 

Thank you very much. 

Mr. WHITFIELD. Thank you. 

[The prepared statement of Mr. Darblenet follows:] 

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Mr. WHITFIELD. Mr. Jobe, you are recognized for 5 minutes. Turn 

your microphone on. 

STATEMENT OF JOE JOBE 

Mr. JOBE. Thank you, Chairman Whitfield, Ranking Member 

Rush, and members of the committee. 

It is good to see you again. I want to thank you for the opportunity to come and testify on behalf of the U.S. Biodiesel Industry. 

My name is Joe Jobe. I am the CEO of the National Biodiesel 

Board. And I hope to leave you today with two important messages. 

First, under the RFS, the advanced biofuel and the biomass-based 

diesel categories programs are working. And second, with the help 

of the RFS, biodiesel is reducing consumer prices at the pump. 

As a brief background, biodiesel is a renewable low-carbon diesel 

alternative made from an increasingly diverse mix of resources, including agricultural oils, recycled cooking oil, and animal fats. It is 

the first and currently the only EPA-designated advanced biofuel 

that is produced on a commercial scale with plants in virtually 

every State and was the first to reach a billion gallons of annual 

production. 

NBB is the national trade association representing the biodiesel 

and renewable diesel industries. Our 200-plus member companies 

have produced the vast majority of the advanced by biofuel pool 

under the RFS, and we are pleased to be welcoming a new 137 million gallon renewable diesel member located in St. Charles, Louisiana. 

Our industry has exceeded the biomass diesel category in every 

single year of the program, and we are on track to do so again this 

year. This is a tremendous success story. It has created over 50,000 

jobs. It is diversifying and actually improving the domestic fuel 

supply, and it is reducing pollution. 

A few positive things about biodiesel to point out. Our industry 

has added decentralized renewable refining capacity. It is diversifying the transportation fuel supply, which will ultimately help stabilize prices to the consumer. It is actually improving the quality 

of the nation’s diesel fuel supply. Biodiesel blends have premium 

diesel characteristics. It is an oxygenated fuel, has high cetane, 

high lubricity, zero sulfur, and there is no fuel economy or horse 

power penalty. In fact, the diesel land speed record was set using 

B20. Biodiesel significantly reduces virtually all regulated emissions, including 57 to 86 percent carbon reductions. 

One of our main feed stocks is recycled cooking oil. It helps keep 

waste out of the sewer systems, landfills, waterways and prevents 

costly infrastructure repairs. 

Another important feed stock is animal fats, which means biodiesel is giving livestock producers new markets for waste, fats, 

and oils, increasing the value of cattle by $10 a head, $1.25 for 

hogs, and 30 cents for poultry. 

Additionally biodiesel is saving consumers money at the pump. 

With the help of the RFS, fuel distributors are purchasing wholesale biodiesel and offering it to consumers at a discount to diesel 

fuel. The mayor of Gadsden, Alabama, recently announced that his 

city is saving $100,000 annually by using 20 percent biodiesel in 

his fleet. Additionally, Navy Secretary Ray Mabus, stated in testiVerDate Nov 24 2008 12:30 Aug 05, 2014 Jkt 037690 PO 00000 Frm 00192 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-73 CHRIS
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mony in April that the Navy is saving an estimated $0.13 per gallon currently by use B20. 

Now, the biomass-based diesel category is structurally different 

than the other sections of the RFS. Primarily there is no automatic 

mandate on the annual volume requirement. There is an EPA rulemaking each year to determine the appropriate volume for the following year. This is a robust and comprehensive process that is 

open to all stakeholders. Last year, that process resulted in a very 

conservative increase from 1 billion to 1.28 billion gallons, and we 

estimate that we are on track to exceed 1.5 billion gallons this 

year. 

Before I close, I want to discuss briefly the issue of fraudulent 

RINs. In 2010 and 2011, the biodiesel industry experienced a few 

cases of criminals generating and trading fraudulent RINs. Our industry took very aggressive measures working closely with EPA 

and the petroleum industry to address the fraud head on. We developed and deployed a robust and comprehensive RIN integrity 

program that has effectively addressed the problem. This was a private sector solution that we developed and deployed. Two of the 

three cases of fraud were resolved in court and two criminals are 

sitting in jail. The third case is pending. 

We also worked with the EPA and the petroleum industry to put 

in place a new regulatory framework that defines quality assurance 

plans, which gives obligated parties the opportunity for an affirmative defense. With these measures in place, we are confident that 

the issue of RIN fraud for biodiesel has been effectively addressed. 

In conclusion, we believe that the RFS was the right policy when 

President Bush signed it in 2005 and again in 2007 with overwhelming bipartisan support, and it remains a sound policy today. 

My industry is fully committed to working diligently with this committee, with the EPA, our partners in petroleum and anyone else 

willing to work with us to make the RFS an unqualified success. 

Thank you for inviting me to testify, and I look forward to answering your questions. 

Mr. WHITFIELD. Mr. Jobe, thank you. 

[The prepared statement of Mr. Jobe follows:] 

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Mr. WHITFIELD. And thank all of you for your testimony. And I 

will recognize myself for 5 minutes of questions. 

I think all of us have appreciated the additional capital investment that has gone in for ethanol and has gone in for biofuels and 

other technology, so that we know that we can produce these fuels. 

And those people who are most concerned about climate change, 

they are very excited about it as well. And I am really glad that 

Mr. Petrowski, Mr. Karr, Mr. Teske, Mr. Darbelnet are testifying 

today, not that I am not pleased to hear from Mr. Jobe and Mr. 

Buis, because we hear from those people frequently, but the one 

group of people out in the country that really do not have a voice 

is the consumer. And frequently, we don’t focus on the consumer 

because we know that the overall policy is supposed to be a good 

policy, everyone is supposed to benefit from it, but the reality is 

when you get down to the independently-owned gas station, the 

automobile manufacturers, the small engine manufacturer, representative of millions of drivers, you do run into liability issues, 

you do run into expenses for putting in the new equipment that is 

compatible with what the government is mandating, and I am assuming you also are exposed to liability issues, because somebody’s 

going to be sued if something goes wrong. 

So, to the four of you, I would just ask, on a scale of 1 to 10, 10 

being you are most concerned about it, how concerned are you 

about the cost to your consumers, the cost to you personally in your 

business, the liability issues, how concerned are you that there 

really will be problems if there is not some adjustment made in 

some way to this? So 10 being, I am really very much concerned; 

or 1, I am not really concerned about it at all. You can just let it 

go. We think it’ll be OK. 

So can we start with you, Mr. Petrowski? 

Mr. PETROWSKI. I would say ten, Mr. Chairman. 

Price is the number one driver for consumers at all times, but 

especially in hard economic times that we have been in. So I would 

say 10. Price is the driver for our business. 

Mr. WHITFIELD. So you are saying by this that if we don’t do 

something, you are as concerned about it as you can be? 

Mr. PETROWSKI. Well, I would not scrap the RFS. Today I 

would—— 

Mr. WHITFIELD. Yes. I am not talking about scrapping. I am talking about adjusting. 

Mr. PETROWSKI. Yes, I would be concerned if we don’t address it, 

bringing the price of RINs down to something cheaper that we are 

going to translate to higher pricing, even though today I would just 

love to blend more ethanol. 5 percent ethanol with a 60 cent discount earns me 3 cents more, which I either can keep as profit or 

put—lower the price 3 cents on the street, which increases traffic 

to my facility, but I cannot put 15 percent in if we do not have liability relief on the automobiles, if we don’t have the right labeling, 

if my equipment is not insured for 15 percent, pumps, dispensers, 

and tanks, so I would love to lower the—anything I can do to lower 

the price to my consumer is wonderful. But $1.50 RINs is subsidizing exports and taxing imports, which in the long run will lead 

to higher energy prices in the U.S., which I don’t want to see. 

Mr. WHITFIELD. OK. Thank you. 

193 

Mr. Karr. 

Mr. KARR. It is a little bit difficult to pick the right number, but 

I am going to go with eight. I think, look, we have very serious concerns about the potential problems with E15 and the legacy fleet. 

Having said that, there are F50s out there. We—some of my companies are already certifying and warranting vehicles to E15, so, 

we are—again, we are committed to, we are able to adjust, but we 

have these issues with the legacy fleet, and we need to think about 

how we transition going forward. 

Mr. WHITFIELD. Mr. Teske. 

Mr. TESKE. Ten. And I would go higher if you’d let me. 

Mr. WHITFIELD. OK. 

Mr. TESKE. Yes. The fact is, is there is going to be misfueling, 

and it will cause premature failure of these engines, and whether 

somebody bought their engine 20 years ago or 20 weeks ago or 2 

weeks ago, they are not going to get what they expected, and it is 

going to come right back at us. 

Mr. WHITFIELD. OK. Thank you. Mr. Darbelnet. 

Mr. DARBELNET. I would say, for our organization, so for us or 

our company, if you will, it is probably a two, because while we 

have thousands of vehicles on the road, I think we can educate our 

drivers to make sure that they don’t put E15 in the tank that 

shouldn’t absorb it, but thinking about our 54 million members, I 

would say it is a 10, because there is a great likelihood that they 

will damage their vehicles. 

Mr. WHITFIELD. Right. OK. Thank you all so much. My time has 

expired. 

Mr. Rush, you are recognized for 5 minutes. 

Mr. RUSH. I want to thank you, Mr. Chairman. 

You probably have noticed that there are a lot of cameras in the 

hearing room today. And there are many Americans who are at 

home today, and some of them are probably viewing this hearing, 

and they are hearing all the testimony and all the questions, and 

I am sure that there are—far too many of them are at home watching this because they are out of a job. And they have not heard any 

commentary on jobs and the impact of the RFS on jobs. 

I think that it would be really a shame, really, if we had this 3- 

hour hearing and did not even utter the word ‘‘jobs’’ and—so I just 

want to ask each of you, if you would, what is the impact of the 

RFS on jobs, and what do you see the future of jobs in relation to 

RFS? Mr. Buis? 

Mr. BUIS. Thank you very much, Congressman Rush. 

The impact currently of the number of jobs that the ethanol industry has created, both direct and indirect, is around 400,000 jobs. 

When we filed what we called the green jobs waiver to EPA to increase the blend rate from 10 percent to 15 percent, the job assessment that was included with that waiver request says moving to 

E15 would create 136,000 new jobs, jobs here in America, jobs that 

can’t be outsourced. 

Mr. RUSH. Mr. Petrowski? 

Mr. PETROWSKI. Thank you, Congressman Rush. 

I feel very passionately about the solution of jobs is to lower overall energy prices in this country. And it is not about jobs in the ethanol industry or jobs laying pipe. It is about manufacturing jobs, 

194 

lowering the cost of energy. The average consumer, both in their 

heating bills and driving, uses about 1,500 gallons a year, so if we 

can lower the price by a dollar, we have put that back into the consumer’s pocket. And discretionary consumer spending is a driver to 

the economy and jobs, so I think the focus of Congress should be 

on lowering energy prices however we can do it, domestic production, having the right facilities to move product from where it is to 

where it isn’t. And I think the RFS has been very helpful in creating an additional motor pool supply of fuel and a diverse supply 

of fuel, so I think it has been very positive. 

But I am not looking at ethanol jobs or pipeline laying jobs; I am 

looking at low energy prices and more consumer spending, and that 

is where I think we will pick up the jobs. 

Mr. RUSH. Thank you very much. 

Mr. Karr, do you have anything you want to add? 

Mr. KARR. I am not an expert. I have no reason to dispute Mr. 

Buis’ numbers. 

Mr. RUSH. All right. 

Mr. KARR. I assume they are probably accurate. 

Mr. RUSH. Mr. Teske? 

Mr. TESKE. Thank you, Congressman Rush. The RFS itself, obviously, we are not against renewable fuels, and so to the extent that 

there are drop-in fuels and they can create jobs, that is great. 

The one comment I would make, though, is there are 5,300 people that work in our U.S. facilities. 

Chairman Whitfield, there are 1,000 jobs in Murray, Kentucky. 

Congressman Barrow, there are 1,500 plus jobs in Georgia. 

The fact is that if there are negative effects that result from E15 

and we get blamed, those people are going to be hindered, because 

we are going to get—it will come right back at us, and our brand 

will be impacted. 

And although there is not—I can’t quote the kind of jobs that 

others on the panel can, the fact is those jobs are really important 

to those people, and those jobs are really important to those communities in which they operate, and so we want to make sure that 

we are not only protecting the consumers, but we are protecting 

our employees that are in our factories today. 

Mr. RUSH. Mr. Darbelnet? 

Mr. DARBELNET. Thank you, Mr. Rush. 

We would agree that the domestic production of ethanol has increased the number of jobs in this country, which we dearly need 

and support. However, we are concerned that we should not be introducing a product which can be harmful to consumers for the 

purpose of increasing the number of employed individuals. So we 

support the positive results that have been achieved, but we are 

concerned about the further risk that we are putting the consumer 

at by not dealing with the E15 issue. 

Mr. RUSH. OK. 

Mr. JOBE. Thank you, Mr. Rush. 

Our industry—I will speak for the advanced biofuel category. 

Our industry accounts for about 85 to 90 percent of the advanced 

biofuel category. And I have been very proud to be a part of what 

is going on in the biodiesel industry. We have added 50,000 direct 

jobs. And many of our members have said that they look for solVerDate Nov 24 2008 12:30 Aug 05, 2014 Jkt 037690 PO 00000 Frm 00202 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-73 CHRIS
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diers that are coming home from Iraq and Afghanistan, because 

these are guys that are experienced in using fuels and dealing with 

equipment, and it is—that is kind of a success story there. 

But one thing that—two quick things I want to point out is that 

it is not just about the direct jobs. In the last 6 or 7 years, our industry has built more than 200 plants. There has been a lot of investment, and that has been a lot of indirect jobs that have gone 

into that in building renewable refinery capacity, and it is all happened not at the expense of the petroleum industry. The petroleum 

industry, as you will notice, is doing fine. And it is really just helping to diversify the transportation fuel supply. 

And that is really what the goal of the RFS is, because if we can 

diversify the transportation fuel supply, as you pointed out in the 

first panel, if we can make the transportation fuel supply look more 

like the power generation supply, make it more diverse, more domestically abundant, then we can really bring transportation fuel 

prices down. And as Mr. Petrowski said, that is going to have the 

biggest impact on the economy. 

Mr. RUSH. Thank you. 

Mr. WHITFIELD. The gentleman’s time has expired. 

At this time, I recognize the gentleman from Illinois, Mr. 

Shimkus, for 5 minutes. 

Mr. SHIMKUS. Thank you, Mr. Chairman. 

Again, appreciate the hearing. 

Mr. Jobe, can you—Mr. Waxman talked about palm oil. So, obviously, I am from the Midwest. We were very involved, obviously, 

in getting biodiesel into the market and mine soybeans, reformulated cooking oil, beef tallow. And also I made a statement in the 

opening statement that the issues that you are or may not be involved with in this whole debate on blend wall; you really are kind 

of a subset of this whole debate. I don’t know if anyone’s raising 

concerns. Can you talk briefly about a couple of those provisions, 

the palm oil thing and how else you are related to this sector? 

Mr. JOBE. Thank you, Congressman. 

I was really hoping you would ask me about that question. Very 

simply put, palm oil does not qualify for the RFS, so the concern 

that palm oil will be coming in to fill the advanced biofuel is not 

a concern at this time. Furthermore, the concern stated by the gentleman from Union of Concerned Scientists is not a concern either, 

and here is the reason: It is based on the structural difference built 

into the advanced biofuel category. In order for the biodiesel industry to grow our category, the biomass-based diesel category, we 

have to go to EPA every year; it is just baselined at a billion gallons, a minimum of a billion gallons. And we have to go to the EPA 

every single year and we have to demonstrate them through very 

substantial and robust data development how much we can 

produce, how much our growers can produce, how much domestic 

supply we have without disrupting other markets, imports, exports 

and all of those other things. 

We have been very, very conservative with our target goals, and 

so you are very right. Biodiesel is made from a very, very diverse 

range of domestic materials, from all types of animal fats from livestock production, all types of oil seeds, and that has been a real 

strength to our industry. 

196 

Mr. SHIMKUS. And we wouldn’t have passed the original piece of 

legislation back in 1998 had we not really expanded the ability for 

a lot of different commodity products to get in there, because it 

needed a big coalition. If it was just soybeans, we wouldn’t have 

enough votes, but by bringing in a whole new coalition, that 

helped. 

And the poignant thing about your explanation of how the system works is really what we are kind of demanding, Mr. Chairman, 

on part of this ethanol debate, is, what is the real production limits? There are four different categories in this whole calculation 

now. What are we actually producing, and what can get into the 

market versus what theoretically do we think we should have and 

why aren’t we there, and that is—I would say that is the whole 

risk premium on the RINs, because we just don’t know. We have 

got an arbitrary number set in statute versus what are we continuing to ask to do? 

I want to raise to Mr. Petrowski this question: Mr. Dinneen, and 

I had to leave, but he mentioned on the first panel, he asked about 

contractual agreements that may prevent retailers from offering 

E15 and E85. Is that an issue that you are aware of? And, of 

course, that would be a retail chain, I guess, vertically integrated 

might be versus an independent. Can you speak to that? 

Mr. PETROWSKI. Yes. Thank you, Mr. Shimkus. I think what he 

was referring to is our equipment, the dispensers, the tanks, plus 

the fear of mislabeling, that someone is going to pull up with an 

older car that can’t take the ethanol, keeps us from—— 

Mr. SHIMKUS. No, I don’t think that is what he is referring to. 

Mr. PETROWSKI. No. 

Mr. SHIMKUS. I think he is referring to actual contractual limitation on a retail location from placing these things in their retail location. Do you want to—go ahead. 

Mr. PETROWSKI. No, not at all. We make agreements to buy product all the time, and we can either buy it in bulk and do the blending ourselves. We are fortunate enough to have our own terminal—— 

Mr. SHIMKUS. Let me ask Tom to answer this question. 

Mr. BUIS. Thank you, Congressman. That has been an issue in 

some areas. The contractual arrangements, I think, is what Bob 

was referring to. And with an E15 retailer, it came to head—once 

he started offering E15 and he was told he was in violation. We 

have also seen, I think, the State of South Dakota and most recently Iowa have passed provisions that prevent contracts that prohibit higher blends under the same canopy. And, you know, if you 

guys want to look at some suggestions into the future, that might 

be something you look at, because—— 

Mr. SHIMKUS. You mean, you are going to offer a possible solution to some of this—— 

Mr. BUIS. I am. 

Mr. SHIMKUS [continuing]. These challenges? 

Mr. BUIS. I just did. 

Mr. SHIMKUS. Great. Thank you. And we would hope you all 

would do that. Let me just end on this. 

My time has expired. But I just pulled up E85prices.com, and I 

do drive a flex-fuel vehicle. In Illinois, we have multiple locations. 

197 

And you would be surprised a—now, there is a BTU fall-off, but if 

you are saving 80 cents, 85 cents a gallon, it can pay, and so if we 

can get them into the retail locations, we can address the blend 

wall and we can solve a lot of problems. 

Thank you, Mr. Chairman. 

Mr. WHITFIELD. The gentleman’s time has expired. 

At this time, I recognize the gentleman from California, Mr. 

McNerney, for 5 minutes. 

Mr. MCNERNEY. Thank you, Mr. Chairman. 

You know, I didn’t hear anyone in this panel say do away with 

the RFS. There was some comment about there—it needs tweaking, maybe the E15 ought to be scaled back to E10 for reasons, and 

I appreciate that. 

Mr. Teske, I just want to say, I have loved my Briggs & Stratton 

motors over the years, so they are an American icon. And I appreciate your remark on the professionalism of the EPA. That is something I truly believe is the case, and it is something we need to get 

the word out a little bit more about. The question I have for you 

is what causes, what specific mechanism causes the failures of the 

Briggs & Stratton motors when they use blends higher than E10? 

Mr. TESKE. Yes. First off, thanks for being a customer. I really 

appreciate it. 

What happens, there are a couple of things that go on. There are 

a number of things, but a couple of things in particular. Basically, 

the materials that we use are rated for certain temperatures, and 

so when you have blends that are higher than E10, the alcohol will 

burn at a higher rate, a higher temperature. And basically what 

happens is, like, valve seats and other materials that are in the engine will degrade prematurely, because it can’t handle the heat 

that it was intended to handle. And so, basically, then when that 

fails, all of a sudden a lot of the emissions regular—the emission 

control things that are in the engine will fail, and then, ultimately, 

it will lead to engine failure. 

Also, when you get—not to take you back to high school history, 

but basically, when you have water and alcohol, obviously, there is 

an attraction that goes on, and so what happens is a lot of our 

seals and other things in the engine will absorb the alcohol, which 

will cause warping and disforming, if you will, and therefore the 

engine will not operate in the same manner that it was intended 

to operate with lower blends of ethanol. 

Mr. MCNERNEY. So can these engines be protected proactively or 

is that too expensive for the average legacy customer? 

Mr. TESKE. For the legacy customer, it can’t—it won’t—it can’t 

be done. Going forward prospectively, certainly we can design engines that will operate. They operate on a plus or minus 5 percent 

of whatever the target is, and when that happens, obviously, one 

of the concerns we have is as we get to E15, and then we ultimately probably get to E20 and then E25, all of a sudden, it becomes very confusing. It is difficult to design a cost-effective engine 

that will handle a multitude beyond plus or minus 5 percent. 

Mr. MCNERNEY. So when did Briggs & Stratton begin designing 

for E10, or did it have to do any design for E10? 

Mr. TESKE. We have seen—we have had to change some materials over time. Years ago, when basically ethanol started to be inVerDate Nov 24 2008 12:30 Aug 05, 2014 Jkt 037690 PO 00000 Frm 00205 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-73 CHRIS
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troduced, we have added—what has been interesting here is of late 

is over the last year or so, we have seen more carburetor issues, 

for example, have occurred throughout the country. The calibration 

and the materials basically don’t handle ethanol all that well, although they will handle E10. When ethanol was pretty much in the 

Midwest, we didn’t see a whole lot of issues on the coast. Now E10 

is throughout, because we were—we test about E5 for certification 

purposes with the EPA. As you start to see the E10 go throughout 

the country, we do on occasion see fuel problems generally because 

as ethanol, higher blends of ethanol sit in the engine, it will gel up 

and will cause issues with starting and other things, which is why 

we have introduced fuel additives to make sure that consumers are 

protected from that. 

Mr. MCNERNEY. OK. 

Mr. Buis, I had a question. 

Mr. BUIS. Yes. 

Mr. MCNERNEY. I was going to ask you, continuing from the first 

panel, what has caused the delay of the success of cellulosic 

biofuels from the initial projections? 

Mr. BUIS. That is a great question. 

You know, the RFS didn’t pass through the Energy Independence 

Security Act till late of 2007. In 2008, we had the biggest economic 

downturn that any of us have seen in our lifetime, not just here, 

but around the world, so you had a lot of investors and lenders that 

went to the sideline. They have started to slowly come out over the 

past year or so, and you started to see more investment into 

biofuels, but the second issue is market space. When you are going 

to produce a product that is already limited to 10 percent, and it 

costs a quarter to a half a billion dollars to build a cellulosic commercial bio refinery, you are probably not going to pull that plug 

and make a lot of investment. That is why we filed the waiver to 

move to higher blends. And despite all the—I think a lot of people 

think it is just E15. The waiver was actually approved for up to 

E15, but there are some, I am not saying this panel, that have this 

feeling, we are not going one ounce, one gallon above E10, because 

we want to kill the RFS. 

Mr. MCNERNEY. OK. Go ahead and answer, if the chairman will 

allow that, Mr. Petrowski. 

Mr. PETROWSKI. Yes. I would say as a retailer, if—cellulosic 

doesn’t need to be mandated, remember, the import is going to be 

silage, grass, biomass, which is much cheaper than corn. We are 

processing 3 billion bushels, I believe that is the right number, of 

corn into the ethanol business at $4 or $5 a bushel. Any manufacturer who could substitute biomass for corn would do so in a heartbeat, because that would just all flow to the bottom line. So I think 

the limitations on cellulosic have been technological. And believe 

me, if I—ethanol today is 60 cents cheaper than gasoline. If somebody were to offer me cellulosic or any ethanol cheaper than that, 

I would buy it in a heartbeat if I could sell it. 

Mr. MCNERNEY. OK. Thank you, Mr. Chairman, for your indulgence. 

Mr. WHITFIELD. The gentlemen’s time has expired. 

At this time, I recognize the gentleman from Nebraska, Mr. 

Terry, for 5 minutes. 

199 

Mr. TERRY. Thank you, Mr. Chairman. 

Mr. Buis, I missed earlier discussions, but I want to know what 

your feel is about whether the blend wall is a real issue or real concern. 

Mr. BUIS. Thank you. 

Thank you, Congressman. We have referred to it as a so-called 

blend wall. And it is so-called because the resistance by those who 

control the infrastructure, the fueling infrastructure, the refining, 

the obligated parties have not done, and oftentimes erected hurdles 

to move into higher blends. 

When the RFS was enacted in 2007, it was always intended to 

get to 36 billion gallons by 2022. We were going to have to have 

higher blends. It has been 4 and a half years ago since we filed 

that waiver for the higher blends. Every regulatory, legal, PR and 

now legislative hurdles that they can erect, they have tried to erect 

instead of moving to a higher blend. 

It could be solved real easy. There is not that much above the 

blend wall for 2013. For 2014, it could go up. You could use E15. 

You can use up to E15. You can use the 85, E30. Those are popular 

brands that sell extremely well, and consumers, despite what the 

first panel said, actually want them, they are buying them. 

Mr. TERRY. All right. Appreciate that. 

Mr. Karr, the EPA said, or it came out when they said—or was 

approving E15, but said it shouldn’t be used for automobiles that 

were manufactured before 2001. Now, average life expectancy of a 

car today is 11 years. I am just wondering, do you know offhand 

how many are left for 2011 and below? 

Mr. KARR. I should probably get you that number for the record 

rather than give you a bad number here. 

Mr. TERRY. That is fine. I wasn’t going to pin you down for an 

exact. I was just curious. 

Mr. KARR. I would say the average age of a car on the road today 

is 11 years. So that tells you that is kind of the middle. We have 

got a lot that are a lot older than that. 

Mr. TERRY. So it could be significant. 

Mr. KARR. But, yes, I can get you the precise number for the 

record. 

Mr. TERRY. So a lot of the arguments, and Mr. Teske was kind 

of hinting at this, but what some engines, EPA said that E15 and 

what can be appropriate for Briggs & Stratton, for lawn mowers or 

for boat motors or—so I guess the question here is that you are 

not—or Mr. Teske, that you are not here saying no E15 anywhere, 

are you? 

Mr. TESKE. Well, what we are concerned about is misfueling. And 

there needs to be measures taken other than just a very small label 

on top. 

Mr. TERRY. Well, that is what I wanted to kind of dive down into 

deeper, is OK, so are there methods that we can use to make sure 

that the consumer is informed? I mean, I can pull up to the pump 

right now and know which one is the E10 and the E85 and the noethanol blend, or unblended, I guess. Do you have enough confidence in the consumer to read those on the pump? 

Mr. TESKE. While I have a tremendous amount of respect for consumers and consumer knowledge, what studies have shown is that 

200 

when consumers are very comfortable with what they have had, 

they don’t pay as much attention as they would when there is 

something new and different. And so if you pull up to the pump 

and you basically have your red can, that 5-gallon can, and you 

want to fill it up and you have always filled it up for the last 20 

years at the same gas station, you are not going to pay as much 

attention to the fact that there are issues. And that is really our 

concern, is that we will try to educate the consumer, definitely, and 

consumers are very smart, but studies have shown that when they 

are comfortable—— 

Mr. TERRY. Well, let me ask Mr. Petrowski, then, not to cut you 

off, but do you think there is a way of communicating at the pump 

so that consumers aren’t mistakenly putting in E15 when it should 

be E10? 

Mr. PETROWSKI. I think we can label very well, but I was told, 

and I am not old enough to remember this, I worked at a gas station in the 1970s, but I was told that when leaded and unleaded 

first came out and people were offering leaded at a much cheaper 

price, there were people, even though the nozzles were mandated 

to be different, who would bring a screwdriver and actually gerrymander their fill pipe so they could take the cheaper product. 

Mr. TERRY. Yes. That is not a mistake. That is intent. 

Mr. PETROWSKI. No, no. That is not a mistake, but not always— 

I have great respect for the consumers, but they are not always 

paying attention at the pump. 

Mr. TERRY. All right. Thank you. 

Mr. WHITFIELD. I would like to just get one clarification here, Mr. 

Buis, something that you had indicated, and someone on the first 

panel made this comment, too, that market access was being limited by the obligators. And factually, is it true that retail service 

stations are primarily owned by large oil companies or not? 

Mr. PETROWSKI. No, Mr. Chairman. Can I answer that? 

Mr. WHITFIELD. Yes. 

Mr. PETROWSKI. In fact, I think that is part of the reason the obligated parties are now feeling the strain, is at one time, that was 

true, but the Exxons of the world, the Mobils of the world. We 

bought a lot of stations from Mobil, have gotten out of the downstream, so they are selling their product in bulk rather than blended to the consumer, so their obligations are greater. So I think that 

has been part of the problem, but most of the gas stations in the 

United States today at the retail level are owned and operated by 

small business people or people who have aggregated, like ourselves. We have 900 stations that we operate. But major oil diversified out of integrating and get rid of their downstream, so they are 

facing an obligation where they are selling in bulk and are obligated, and they are not selling as much what we say the parlance 

in the trade is over the rack or at the nozzle. 

Mr. WHITFIELD. Thank you. I am sorry. 

Mr. Olson, you are recognized for 5 minutes. 

Mr. OLSON. I thank the chairman. And thank you to the witnesses for coming back. Our previous panel helped us get a better 

sense of where things stand on the RFS from the upstream view. 

This panel represents a shift, where the rubber meets the road and 

the impacts of RFS on families and businesses. It helps us get our 

201 

hands on one of the most controversial issues related to ethanol: 

how it impacts engines in vehicles. And I apologize if my questions 

have been repetitive, but duty called, and I had to run away for 

a bit, but my first question is for you, Mr. Petrowski. Increased use 

of E15 is one of the ways in which the ethanol industry sees a path 

to meeting the RFS. What would it take in terms of infrastructure 

for E15 to be more widely available with your member companies? 

Mr. PETROWSKI. Thank you, Mr. Olson. 

What I would like to see is us get some waiver from liability for 

misfueling. I would like to see us—when they talk about the average age of the cars, every new station we put in, we are putting 

in equipment that is compatible with the higher blend. The problem is we have 135,000 stations in the United States, and there are 

probably only 10,000 that get their tanks and pumps done every 

year, but, yes, we ourselves have done 150 of our own stations, 600, 

over new mainly for the inside to sell more food products, because 

there has been a shift in this country from tobacco, which has been 

a good shift, to food and beverages inside, but when we do it, we 

also change our pumps out to be more compatible with higher 

blends, but we could get there faster. As I said, because ethanol is 

60 cents cheaper, we would rush to there—if I can save 3 cents to 

4 cents a gallon by blending more ethanol, which at 60 cents discount, a 5 percent more blend will save me 3 cents. I sell 4 billion 

gallons a year, so you can work the math on that. The Federal Government would be very happy with the taxes, I would be very 

happy with my paycheck. Everybody—and the consumer, if I posted a 4 cent lower price on the pump, the consumer would be very 

happy. 

Mr. OLSON. Yes, sir. And that is a real issue, because if the Secret Service could make a mistake of filling up the President’s limousine in Israel with diesel fuel in a gasoline vehicle, then people 

that come into Tex 22 could probably make that same mistake with 

E10 and E15. 

I have one more question for you, sir. How much do you hear 

from consumers about a ban for E15, your clients, the people that 

make your industry go? Are they clamoring for it? Just a little 

murmur? 

Mr. PETROWSKI. Again, I would say our consumers would say if 

you can get me a fuel that is cheaper that isn’t going to do damage 

to my engine, I am with you all the way. Again, demand pulls supply; supply does not create demand. And so we have no objections. 

We had 20 E85 stations throughout our system. We have actually switched them over to diesel, not because we have anything 

against ethanol, but we weren’t selling it. For example, on the Massachusetts turnpike, our E—we sold 12 million gallons of gasoline 

last year and 1 million gallons of E85. Now, maybe there is more 

SUV’s and flex-fuel vehicles in Minnesota or Illinois than there is 

in Massachusetts, but we switched a lot of our E85 tanks over to 

diesel because we saw our customers say to us, as the new diesels 

were coming in, the high-mileage diesels, they wanted more and 

more access. So we respond to the consumer. 

Mr. OLSON. And thank you, Mr. Petrowski. 

Final question for you, Mr. Teske, on not just automobile engines, but the engines you make from Briggs & Stratton. And in 

202 

deference to the truth, I must admit that I have a lawnmower in 

my garage, but it is not powered by a Briggs & Stratton engine. 

But if I had a lawnmower in my garage powered by a Briggs & 

Stratton engine and I misfueled it with E15, who would be responsible for the damages? Any idea? 

Mr. TESKE. Yes. And you are a prospective customer, so perhaps 

later we can chat. Basically, if you use E15 in your engine, your 

small engine, we void the warranty, the warranty. So, basically, 

theoretically, we are not responsible. It is really the consumer who 

would be responsible. But the consumer will not—they will not look 

at it and say, oh, I put ethanol in, they will look it in and they will 

see the diamond bar logo on the top, and they will say, boy, what 

happened to my Briggs engine. 

Mr. OLSON. How could I have prevented that? What could I have 

done to mitigate the damage by putting E15 in there? Anything? 

I just reach in my wallet and pay it? 

Mr. TESKE. No. I mean, once E15 in, right, it is in there and it 

is—unless you—if you start it up, it will start to cause issues. 

Mr. OLSON. We have a name for that, but I will leave that at the 

side. 

Mr. WHITFIELD. The gentleman’s time has expired. 

At this time, I recognize the gentlemen from Texas, Mr. Hall, for 

5 minutes. 

Mr. HALL. Mr. Buis, in your opening statement, I think the 

chairman and I were the only ones that heard it, but ethanol’s 

cheaper than any other fuel? Was that your statement? 

Mr. BUIS. I am sorry. I couldn’t hear the question. I did make 

the statement ethanol is cheaper than any other transportation 

fuel. 

Mr. HALL. And—— 

Mr. BUIS. We are 67 cents today under unblended gasoline. 

Mr. HALL. Let me ask you, is the blend wall a real concern? Just 

yes or no. 

Mr. BUIS. Yes. 

Mr. HALL. Your organization led the efforts to secure EPA approval in E15? 

Mr. BUIS. Correct. 

Mr. HALL. And do you now think E15 is a viable option for gas 

stations to sell and vehicle owners to use? 

Mr. BUIS. I do. 

Mr. HALL. E15 was approved for 2001 and new vehicles but not 

for older vehicles, was it? 

Mr. BUIS. Well, not for older vehicles was much to our chagrin, 

because when we filed—— 

Mr. HALL. Well, much to your chagrin, but it is a fact. 

Mr. BUIS. Yes, it is. 

Mr. HALL. OK. Let me go on. Why do you think vehicle and 

equipment makers are concerned about E15? 

Mr. BUIS. I didn’t hear the first part of it, sir. 

Mr. HALL. Why do you think most gas stations have shown little 

interest in carrying E15? 

Mr. BUIS. I think there has been enough controversy raised by 

those who don’t want to see us move to higher blends that it has 

caused some resistance. We are slowly breaking through it, but 

203 

there was also legal challenges filed to E15. The U.S. District Court 

of Appeals ruled two to one in favor of EPA, and the Supreme 

Court refused to hear an appeal of the case. 

Mr. HALL. Well, let’s get back to ethanol, then. For small and 

marine engines and any other gasoline engine other than 2001 and 

newer passenger cars and light duty vehicles, the law explicitly 

prohibits E15. Further, EPA has issued a specific rule to mitigate 

consumer mis-fueling, including a label specific to E15. In fact, ethanol is the only fuel that requires a warning label at the pump. 

Mr. BUIS. Yes, sir. 

Mr. HALL. Is that true? And ethanol is the only ingredient labeled in gasoline, even though gasoline is a chemical which contains approximately 200 different components—— 

Mr. BUIS. Correct. 

Mr. HALL [continuing]. And that is not even listed. So it may be 

cheaper to buy, but is it cheaper to use in the long run? If I would 

fill my tank up with high ethanol, how far could I get from the 

service station in the country? 

Mr. BUIS. With pure ethanol? 

Mr. HALL. Yes. 

Mr. BUIS. That is not available. You can go up to 85 percent. Oftentimes 85 percent is not even 85 percent, depending upon the 

season. It can be—— 

Mr. HALL. Well, how far would my car go if you filled it up with 

ethanol? Just—— 

Mr. BUIS. If you filled up your regular car—— 

Mr. HALL. I wouldn’t get out of the station, would it? 

Mr. BUIS [continuing]. With E15, the mileage drag is going to be 

less than 2 percent. 

Mr. PETROWSKI. Congressman Hall, could I interject on retailers 

and stations? 

Mr. HALL. Not right now. 

Mr. PETROWSKI. No? OK. 

Mr. HALL. And you say there is no reason to repeal or to reform 

RFS. That is your opinion, isn’t it? 

Mr. BUIS. It is, yes, sir. 

Mr. HALL. And if the RFS is repealed, would anybody still be 

using ethanol? 

Mr. BUIS. I think would be—— 

Mr. HALL. In this country? You use it overseas and in South 

America, but would they be using it in this country—— 

Mr. BUIS. Yes, sir, they would. 

Mr. HALL [continuing]. With gasoline? 

Mr. BUIS. Yes, sir, they would. Ethanol is the cheapest source of 

octane available to produce gasoline from. 

Mr. HALL. So did you—I think that—40 percent of corn’s going 

to fuel. I am thinking about ethanol being the cheapest of all fuels 

and what it is used for. Ethanol is used with gasoline, or it has to 

be mixed with something to be sold, does it not? 

Mr. BUIS. Yes. Yes, sir. 

Mr. HALL. And 40 percent of the corn going to fuel, but it can 

be eaten or it can be fed to livestock, or Jack Daniel might buy it 

or the vodka people or Jose Cuervo might want to bid on it, but 

204 

absolutely unless it is mixed with gasoline, it has very little use, 

does it? 

Mr. BUIS. Well, yes. There is industrial uses also for ethanol. 

But I have to challenge this 40 percent. Everybody gets—when 

they get a paycheck, you have a gross salary and you have a net, 

and what the critics use on corn ethanol is the gross. They say we 

use 40—— 

Mr. HALL. But don’t you use 40 percent? How about using—— 

Mr. BUIS. Pardon me? 

Mr. HALL [continuing]. Thirty-nine percent? 

Mr. BUIS. No, it is not 39 percent, sir. 

Mr. HALL. Or 20 percent. 

Mr. BUIS. It is about 18 percent of the corn crop, because—— 

Mr. HALL. If you use 17 percent of the corn crop? That is a lot 

more than ethanol. 

Mr. BUIS. Pardon me? 

Mr. HALL. If you use 17 percent of corn, that is going to fuel. 

Mr. BUIS. There is residual value. We create a co-product. 

Mr. WHITFIELD. I am sorry to interrupt this. We have got the 

Health Subcommittee that wants to come in here for a hearing at 

1:30. 

And Mr. Petrowski, I am going to give you 1 minute to reply. You 

were trying to make a comment. 

Mr. PETROWSKI. Thank you, Mr. Chairman. Here is the problem 

for retailers today. I would love to have a higher blend than E10, 

and as I have said before, but my in-ground tank equipment, my 

pumps, my dispensers are warrantied for nothing higher than E10. 

And my insurance company has also said that if I put any product 

in that voids a warranty on this equipment, I am not insured for 

any residual spills or leaks. So short term, if I put in a greater 

amount, I would make a lot of money, but long term, the expense 

of putting a liability on that would make me—— 

Mr. WHITFIELD. Yes. That is a serious—it is a very serious issue. 

Mr. PETROWSKI. It would make me an ex-CEO. 

Mr. WHITFIELD. Yes. 

Mr. SHIMKUS. Mr. Chairman, what Mr. Petrowski should have 

done is made sure he mentioned the liability relief bill that we 

have before the Chamber, which would be very helpful in his sector. 

Mr. PETROWSKI. Yes. I—— 

Mr. WHITFIELD. Mr. Shimkus can take care of your liability for 

you. 

OK. That concludes today’s hearing. We will have another hearing tomorrow. And I want to thank all of you for coming. We appreciate your testimony. We look forward to working with you as we 

explore further options. 

And with that, the hearing will be adjourned, but I do ask unanimous consent that we enter into the record comments by the climate—it has been accepted. 

Mr. WHITFIELD. The record will remain open for 10 days. 

The hearing is adjourned. 

[Whereupon, at 1:36 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

205 

PREPARED STATEMENT OF HON. JOHN D. DINGELL

Mr. Chairman, I would first like to commend you, Chairman Upton, and Ranking 

Members Waxman and Rush for holding this hearing. The way that the Committee 

has gathered stakeholder input through whitepapers and extensive witness testimony reflects the complexity of the issues surrounding the Renewable Fuel Standard and I commend our committee leaders for dealing with this in a bipartisan manner. 

The use of renewable fuels can help us reduce our use of foreign sources of oil 

however there are also other arguments against biofuels. There is differing information on the effect renewable fuels have on the food supply chain, the life-cycle air 

emissions, and the cost-benefit of adding biofuel to gasoline. Shortly after passage 

of the Energy Independence and Security Act of 2007, I said changes to the RFS 

would likely need to be made based on changing market predictions. Perhaps now 

is the time and I look forward to working with Committee leadership to determine 

what changes merit further discussion based on the factual record the committee 

is now gathering. 

We have already heard testimony from the Department of Agriculture that feed 

costs are over half of dairy cattle expenses and over 40 percent for hogs. This in 

turn may drive up costs for the food and restaurant industry. We also heard from 

the Energy Information Administration about ethanol’s lower energy content could 

be driving consumers away from purchasing E85. Also, our innovative automotive 

manufacturers can make vehicles that can run on any number of types of fuels but 

if we don’t have the refueling infrastructure in place, where will consumers fuel up? 

Today we will hear from stakeholders who deal with the requirements of the RFS 

on a daily basis. Arguments will be made about the effect on food prices within the 

restaurant industry and the fact that so little E85 is sold at stations. Other arguments will be made regarding the benefits to the agriculture industry and securing 

America’s energy independence. Some will advocate for a full repeal of the RFS and 

other will want it remain as it is. I will continue to listen to stakeholders about 

what action makes the most sense and I remain encouraged by the bipartisan work 

to this point by both Republicans and Democrats and encourage them to continue 

their work. 

We need to keep fighting to put policies in place that create domestic demand for 

clean energy so that we can regain our leadership position in the clean energy race. 

I believe that good environmental policy and good economic policy go hand in hand. 

I look forward to today’s testimony and examining what proposals the committee determines warrant further examination. 

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(217) 

OVERVIEW OF THE RENEWABLE FUEL 

STANDARD: STAKEHOLDER PERSPECTIVES, 

DAY 2 

WEDNESDAY, JULY 24, 2013 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY AND POWER, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 1:35 p.m., in room 

2123, Rayburn House Office Building, Hon. Ed Whitfield (chairman 

of the subcommittee) presiding. 

Present: Representatives Whitfield, Scalise, Shimkus, Terry, 

Latta, Cassidy, Olson, Gardner, Griffith, Barton, Upton (ex officio), 

Rush, Barrow, and Christensen. 

Also Present: Representatives Matheson, Braley, and Welch. 

Staff Present: Nick Abraham, Legislative Clerk; Gary Andres, 

Staff Director; Charlotte Baker, Press Secretary; Sean Bonyun, 

Communications Director; Matt Bravo, Professional Staff Member; 

Allison Busbee, Policy Coordinator, Energy & Power; Tom 

Hassenboehler, Chief Counsel, Energy & Power; Ben Lieberman, 

Counsel, Energy and Power; Chris Sarley, Policy Coordinator, Environment and Economy; Tom Wilbur, Digital Media Advisor; 

Kristina Friedman, Minority EPA Detailee; Bruce Ho, Minority 

Counsel; Ryan Skukowski, Minority Staff Assistant; and Alexandra 

Teitz, Minority Senior Counsel, Environment and Energy. 

Mr. WHITFIELD. I am going to call the hearing to order. As you 

know, yesterday was our second hearing on Renewable Fuel Standards. We had two panels of witnesses yesterday and we have our 

third panel of witnesses today. So I want to thank all of you for 

joining us today. And I will be introducing the members of the 

panel. But I would like to recognize the distinguished gentleman 

from Iowa, Mr. Braley, for the purpose of an introduction. 

Mr. BRALEY. I want to thank you, Mr. Chairman, for holding the 

hearing and extending me the courtesy of introducing a friend of 

mine, a very distinguished Iowan, who is the first woman to be 

president of the National Corn Growers Association, Pam Johnson 

from Floyd, Iowa. Pam is a sixth generation farmer, who raises 

corn and soybeans with her husband, their two sons, and their 

young families. They also manage a seed business. And the thing 

that I noted most about her is she describes herself as coming from 

a long line of very strong men and women who have farmed for 

hundreds of years. And I think that says a lot about you. Welcome 

to the committee. 

218 

Mr. WHITFIELD. Well, thank you very much. And, Ms. Johnson, 

I thank you for being with us today. We do look forward to your 

testimony. 

And at this time, I will introduce the other members of the 

panel. We are glad to have all of you. Mr. Bill Roenigk, who is the 

senior vice president of the National Chicken Council; we have Mr. 

Ed Anderson, who is CEO of Wen-Gap. And he is testifying on behalf of the National Council of Chain Restaurants; we have Mr. 

Chris Hurt, who is a professor at the Department of Agricultural 

Economics from Purdue University; and then we have Mr. Scott 

Faber, who is Vice President of Government Affairs for the Environmental Working Group. 

And as you know, this is one of those issues where there is not 

a lot of complete agreement on. So we have heard a lot of different 

views. And we do look forward to hearing your views today. Each 

one of you will be given 5 minutes for an opening statement. And 

you will notice there are a couple of boxes on the table. And actually when the light turns red, that means stop. But if you are in 

the middle of a sentence, feel free to go ahead and complete it. 

So, at this time, Ms. Johnson, we will start with you. And you 

are recognized for 5 minutes for your opening statement. 

STATEMENTS OF PAM JOHNSON, PRESIDENT, NATIONAL 

CORN GROWERS ASSOCIATION; BILL ROENIGK, SENIOR VICE 

PRESIDENT, NATIONAL CHICKEN COUNCIL; ED ANDERSON, 

CEO, WEN-GAP, LLC, ON BEHALF OF NATIONAL COUNCIL OF 

CHAIN RESTAURANTS; CHRIS HURT, PROFESSOR, DEPARTMENT OF AGRICULTURAL ECONOMICS, PURDUE UNIVERSITY; AND SCOTT FABER, VICE PRESIDENT OF GOVERNMENT AFFAIRS, ENVIRONMENTAL WORKING GROUP 

STATEMENT OF PAM JOHNSON 

Ms. JOHNSON. Thank you, Chairman Whitfield, and members of 

the subcommittee, thank you for the opportunity to testify about 

the impacts of the Renewable Fuel Standard on the Agricultural 

Sector. My name is Pam Johnson. I am a sixth generation farmer 

for Floyd, Iowa, where I raise corn and soybeans with my husband 

and two sons, and we raised hogs for 38 years. I currently serve 

as the president of the National Corn Growers Association. And 

here today I am the voice of the family farmer and give the perspective of the rural community to this panel. 

NCJ was founded in 1957, and represents over 39,000 dues-paying corn farmers. And corn is possibly the most versatile crop in 

the world, and demand is at an all-time high. The RFS is a critical 

piece of our Nation’s energy policy. It has created jobs, lessened our 

dependence on foreign oil, and improved the environmental footprint of our Nation’s transportation fuels. In 2012, the RFS supported more than 300,000 jobs, displaced 465 million barrels of imported oil, and lowered gas prices by at least 89 cents per gallon. 

It spurred the development of advanced in cellulosic biofuels. In 

short, it is doing exactly what it was designed to do. 

When the RFS was initially conceived, corn producers were facing significantly depressed prices, averaging $2 per bushel. Between 1990 and 2006, producing corn was a losing business. As a 

219 

result, grain farmers became reliant on government payments as a 

source of income and as a means of survival. This dynamic changed 

in part to the emergence of the ethanol industry and the certainty 

provided by the RFS. Now all commodity prices across the board 

have risen, and without the RFS, it is likely that the entire farm 

economy would be in a deep recession. There is opportunity once 

again in rural America. Our two sons and a growing number of 

young farmers have returned to the farm after college. Corn production has allowed our livestock industry, ethanol industry, and 

our communities to grow. Due to the tax revenues and job security 

that the RFS enables, my small community has a new fire station, 

a remodeled hospital, and my grandson’s kindergarten class is 

large enough to need another teacher. 

Much of the criticism that the RFS faces regarding food prices, 

food availability, and its environmental footprint, are exaggerated 

at best and blatantly false at worst. Because of the farm value of 

commodities represent such a small share of retail food prices, the 

impact of the RFS on food prices is indiscernible. Higher energy 

prices as a result of increased petroleum costs play much larger 

role. The World Bank found nearly two-thirds of the increases in 

food price since 2004 are the result of the increased price of crude 

oil. According to USDA, the farm share of the food dollar is 15.5 

cents for 2011, this is below the average of 16.1 cents for the prior 

18 years. The farmer is getting a smaller percentage of the food 

dollar, therefore, it is unlikely that commodities prices or the RFS 

are large contributors to food price inflation. 

Corn farmers have responded to demand by producing more corn 

on roughly the same amount of land. In the last 30 years, corn production has improved all measures of resource efficiency, land use, 

oil erosion, irrigation, energy use, and greenhouse gas emissions. I 

am proud to say that corn farmers work hard to be good stewards 

of the land and the environment. Our farmers continue to produce 

enough to meet increased demand for corn as food, feed, fuel, and 

fiber. We know the importance of seeking and embracing practices 

that will sustain the soil, to produce crops in the future. 

Farmers have increased yields, produced more food, and avoided 

clearing additional acres of land. This has curbed greenhouse gases 

equal to a third of the total emissions since the industrial revolution. No other industry can claim to have done more. Not only has 

the RFS enabled our Nation to be more energy secure, some consumers have been given better and lower options at the pump. Last 

Friday, I filled my car at a station in Iowa with E–85. It was $1.34 

cheaper than E–10, as pictured on the screen. The RFS is enabling 

families to choose a gas that is cleaner for future generations at a 

fraction of the price. NCGA appreciates the subcommittee’s work to 

understand our perspective. We strongly believe that the RFS is 

doing exactly what it was intended to do. It is successfully driving 

adoption of renewable-fuel alternatives to petroleum, supporting 

jobs across the country, and ensuring we remain a global leader in 

developing new energy sources here at home. I look forward to 

hearing the testimony from the other witnesses and answering 

your questions. Thank you. 

Mr. WHITFIELD. Ms. Johnson, thank you very much. 

[The prepared statement of Ms. Johnson follows:] 

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Mr. WHITFIELD. And, Mr. Roenigk, you are recognized for 5 minutes. 

STATEMENT OF BILL ROENIGK 

Mr. ROENIGK. Good afternoon, Chairman Whitfield, members of 

the subcommittee. Thank you for this opportunity to participate in 

this critically important and most timely hearing on the Renewable 

Fuel Standard. I am Bill Roenigk, and I am speaking on behalf of 

the National Chicken Council. The National Chicken Council represents companies that produce, process, and market over 95 percent of the chicken in the United States. About 40 vertically-integrated chicken companies that are federally inspected comprise the 

U.S. industry. Since 2007, all these companies, at times, have 

struggled financially. Some have struggled longer and more severely than others. Chicken companies have been economically 

squeezed for much of the past 6 years. Rising feed costs for much 

of the past 6 years have outpaced the ability of these companies to 

pass on the higher cost of feed. 

At least a dozen chicken companies have succumbed to this severe cost price squeeze by ceasing operations or having to sell their 

assets at basically fire-sale values, in some cases, to foreign owners. The business disruptions directly affects over 25,000 family 

farms and more than 300,000 employees that are directly working 

for the chicken companies. Since the RFS was implemented in October 2006, the feed costs for chicken, turkeys, and eggs have gone 

up over $50 billion. And that is not the total farm—or feed cost, 

that is the additional feed costs that we have had to incur, and it 

has been an understatement to say that we have had a difficult 

time passing on that $50 billion cost. More troubling than the higher costs actually is the volatility in trying to outguess the market. 

If you buy corn at $8 and it goes to $6 and your competitor buys 

at $6, you are at a tremendous disadvantage in trying to compete 

in the marketplace. 

The RFS statute and the Energy Independence Security Act of 

2007 is not just broad and complex, as the chairman has indicated 

in his comments about the hearing, it is also a statute that has 

outlived its usefulness if in fact the conventional fuels component 

of the RFS ever did have any usefulness. The actual experience of 

implementing the RFS has, unfortunately, been very much as those 

of us in animal agriculture expected. Our negative expectations 

have for the most part been exceeded and exacerbated by the impact of shortfalls of the corn crops of the past 3 years. 

The RFS clearly lacks flexibility when the corn crop falls short. 

The unintended consequences of forcing a move too far and too fast 

with corn-based ethanol have become overly clear and overly painful. It has also become overly clear and apparent that there is no 

workable or reasonable provision in the RFS to provide flexibility 

when the corn crop is severely inadequate to meet all the needs. 

I also would like to point out that the ‘‘renewable’’ part of the Renewable Fuel Standard term is a misnomer. That is, ‘‘renewable’’ 

implies there is abundance of some natural resource that provides 

an unending supply of some product. Having to apply over 200 

pounds of commercial nitrogen fertilizer to achieve a corn yield of 

160 bushels an acre does not qualify in our estimation as being a 

234 

renewable resource. If you did not apply that fertilizer, your yields 

would be cut in half; if you didn’t apply them again the next year, 

you would be cut in half again. In short, the Renewable Fuel 

Standard, at least for the conventional biofuels part of it is broken 

beyond repair. 

It is imperative and important at this time that Congress take 

action to take a hard, critical look at the RFS. If Congress concludes as we do, the RFS cannot be fixed because it is broken beyond repair, then Congress must do the right thing. And I would 

recommend those who are interested in more information about the 

National Chicken Council’s position that you go on the committee’s 

Web site and look for our white paper we submitted in response to 

your call for the impact on agriculture. The National Chicken 

Council looks forward to working with the ask subcommittee and 

others in Congress to fix, if possible, this very broken legislation. 

Thank you, Chairman Whitfield, and members of the committee 

for this opportunity. And we look forward to your questions. 

Mr. WHITFIELD. Thank you very much. 

[The prepared statement of Mr. Roenigk follows: ] 

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Mr. WHITFIELD. And Mr. Anderson, appreciate you and your family being here, and you are recognized for 5 minutes. 

STATEMENT OF ED ANDERSON 

Mr. ANDERSON. Thank you. Good afternoon, Chairman. 

Mr. WHITFIELD. Be sure and turn your microphone on. 

Mr. ANDERSON. Good afternoon, Chairman Whitfield, Ranking 

Member Rush, and members of the committee. My name is Ed Anderson. My wife Judy and I, with our son, Eddie, own a small 

Wendy’s franchise with four restaurants in Virginia. We have 138 

employees. I was also elected to the board of Wendy’s Quality Supply Chain Coop, QSCC, a not-for-profit purchasing coop owned by 

Wendy’s restaurant operators like me. QSCC purchases the food for 

Wendy’s and is staffed by experts who understand and help us interpret commodity markets. The National Council of Chain Restaurants asked me to be here to represent our industry. I have 

never done anything like this in my life, but I do have a responsibility to my employees, fellow franchisees, customers, the food service industry, and my family to make sure Congress knows a wellintended idea has turned out to be a very serious problem, and it 

is getting worse. 

Judy and I are the face of American small businessmen and 

women. We have worked hard to build our business. But when 

Congress passed the Renewable Fuel Standard, it created a new 

burden for businesses like ours. Now restaurant owners and employees like us are being hit at a time when our economy can’t afford it. I doubt many restaurant operators or our customers know 

that an EPA mandate on corn ethanol is at the root of food cost 

increases. 

Based on several analyses, we are asking Congress to repeal the RFS because it is estimated to be costing us up to $30,000 more 

per restaurant than we would normally pay. For our family business, that is up to $120,000 a year in additional costs. That might 

not be a lot of money in Washington, D.C., but for me and many 

others in the restaurant business, that is a lot of money. If Congress repealed the RFS, it would level the playing field and over 

time, return normalcy to the food supply chain so everyone competes fairly and food becomes more affordable. 

Last year, RFS proponents blamed the drought for high corn 

prices. This year, they are blaming it on oil prices. But a 2012 report by PricewaterhouseCoopers confirms what our analysis at 

QSCC already thoroughly studied. It is the RFS that distorts food 

commodity costs so much that restaurants, our suppliers, and consumers are forced to pay more than we normally would under market conditions. 

Please understand we are not anti-ethanol. We know if it wasn’t 

for American farmers and ranchers, we wouldn’t be here, and we 

support American agriculture. We get all of our beef and chicken 

from here in North America. But this mandate is making food so 

expensive that it is harder to continue investing in new or remodeled restaurants, which would create badly needed construction 

and restaurant jobs. I believe with all my heart that we live in the 

greatest country in the world. This country was built on the hard 

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work and the ingenuity of those who were willing to risk it all to 

build something. Removing the mandate for ethanol allows to stand 

on its own. Capitalism allows us all to adjust and be successful. 

Let the natural market dictate the cost of ethanol, not a mandate. We can’t pass these costs on to our customers. They are already struggling in this economy, and their own food costs at grocery stores have also gone up because of the RFS. 

We are appealing to Congress to thoroughly study the issue like 

we have. Please listen to all sides and consider all implications. 

Then you will understand why repeal is the best solution. Recently, 

an educational campaign was launched called ‘‘Feed Food Fairness, 

Take RFS Off the Menu.’’ It is led by the National Council of Chain 

Restaurants and supported by a coalition of small business owners, 

operators, franchisees, and many others in the food supply chain to 

urge Congress to repeal the RFS. 

We believe the RFS must be repealed because we are concerned 

that if, for example, just the corn ethanol mandate is eliminated 

from the RFS, it would simply be replaced with some other food 

crop, and we would be right back where we are today. What sounded like a good idea has had serious consequences and artificially 

driven up the price for food both at home and in our restaurants. 

Judy and I are the kind of people that make up much of the 

chain restaurant industry. We are here as small business owners, 

as employers, and as a family to bring attention to this issue and 

ask Congress to take action for all of us. Thank you. 

Mr. WHITFIELD. Thank you, Mr. Anderson. 

[The prepared statement of Mr. Anderson follows: ] 

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Mr. WHITFIELD. And Professor Hurt, you are recognized for 5 

minutes. 

STATEMENT OF CHRIS HURT 

Mr. HURT. Thank you for the opportunity to provide some comments on the impacts of the RFS to date and to discuss the future 

direction of the RFS and its implementation. Out in the Midwest, 

we view what happens to the RFS as one of the most important 

drivers of the entire farm economy. The RFS really does matter to 

U.S. agriculture. I am here today as an agricultural economist from 

Purdue University. That is the land grant college of Indiana. And 

I am here to represent U.S. agriculture broadly and not to have 

any advocacy position on the RFS. 

Some call the current high farm commodity price period the 

‘‘biofuels era.’’ I think it is a little bit of a mistake to believe that 

the RFS was the sole factor that caused the amount of changes in 

prices we have had. And those have had major impacts as you have 

already heard on different sectors. 

We really have had two major things that changed that drove the 

demand so much higher for agricultural grains. One of those was 

clearly the biofuels. There we saw the massive increase in acreage, 

a lot of new demand for acreage, for corn, that increased about 16 

million acres in the United States. That was a very large surge in 

demand. But there was a second very rapid surge since 2005, and 

that has been the growth of incomes in China and resulted in purchases of soybeans here in the United States, the additional purchases required about 13 million additional acres. All these factors 

have been built into higher grain prices. If we just look at the acreage impact, 16 million acres on corn driven by RFS. And 13 million 

on soybeans, it is about 55 percent of the acreage, higher acreage 

was driven by the—directed by the RFS. 

So in some way, I think the RFS did have increased—the increase for corn ethanol was very rapid, maybe a little more rapid 

than U.S. farmers could supply. And clearly, we have had supply 

problems, as was mentioned already. But the soybean purchases 

from China are also part of this explosive price period. 

Certainly, RFS has, as you have already heard, provided positive 

benefits for some sectors, the grain producers and farm landowners, especially. And it has been negative for people who are 

end-users and obviously the animal producers we have heard from, 

food consumers we have heard from, and those that are involved 

like restaurant industry. In the farm sector, U.S. farm incomes 

shot from $79 billion in 2005 to a record 128 billion estimated by 

USDA this year. Even more startling is farm land values have 

risen about 150 percent during this time period, since 2005, and 

that is, really, a very large number, approaching $1 trillion of extra 

real estate value in farmland. $866 billion higher land value, real 

estate value for farms in 2013 versus 2005. 

The downside, of course, was felt by those users of grains. Prices 

of feed shot higher for the animal industry, as you have heard. And 

the animal industry cannot immediately pass that on. The prices 

are determined by their supply that year; when they had much 

higher feed prices, they can’t pass it on. They absorbed that in 

losses in their margins, as you have already heard. And then evenVerDate Nov 24 2008 12:30 Aug 05, 2014 Jkt 037690 PO 00000 Frm 00253 Fmt 6601 Sfmt 6601 F:\MY DOCS\HEARINGS 113\113-73 CHRIS
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tually those losses discouraged some people. We have then a reduction in the amount of food available. 

I looked at some of the meat sector. Per capita availability of 

meat has gone down, since grain prices went up at about 5 percent 

this year, per capita supplies of chicken and turkey; pork availability is 6 percent lower, and beef supplies in the United States 

are down 14 percent since we had that cheap corn. 

So, clearly, we look at that. Consumers have less food availability 

to choose from at higher prices. They are definitely losers. Retail 

food prices have been mentioned. They have risen about—food has 

risen about 1 percent faster than the core inflation rate. And again, 

as is mentioned, it is the commodity portion of the food that we 

would relate to, the RFS, so it is a smaller portion. 

Certainly the RFS has some major issues coming up. The blend 

wall I am sure you have talked about. We have a really slow start 

towards E–15 and E–85. We have tiny cellulose production, which 

was supposed to be the direction we were going at this point. And 

other issues. 

Let me conclude then by saying crop farmers, I think, would like 

to maintain conventional ethanol levels about where they are 

today. I think they can reach the 15-billion gallon level that is slated. Our problems really are over on the cellulosic side. 

And in terms of oil seeds, we can see some further increase in 

oil seeds. This might be like soybean oil. But I think the bottom 

line is what we would like the agricultural sector is to see some 

stability, as corn growers have indicated. We would really like to 

see, from the end-user side, we would like to see that there not be 

legislative mandates that increase the demand beyond the ability 

to supply that. So that we look at the supply, how quickly can supply grow. And if we are going to have mandates that those mandates, not increase demand quicker than supply. I look forward to 

any questions you have. Thank you. 

Mr. WHITFIELD. Thank you. 

[The prepared statement of Mr. Hurt follows:] 

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Mr. WHITFIELD. And Mr. Faber, you are recognized for 5 minutes. 

STATEMENT OF SCOTT FABER 

Mr. FABER. Thank you, Mr. Chairman, Ranking Member Rush. 

And thank you, members of the committee. I am the last witness 

on the last panel. So I will be brief, and I will take to heart Mr. 

Shimkus’s command to listen and be constructive. I think that is 

exactly the right mindset to bring to this issue. 

Mr. WHITFIELD. Would you mind just taking your microphone a 

little closer. 

Mr. FABER. Absolutely. I will do whatever Mr. Shimkus says. 

So I do think it is time to—and we have heard this over the last 

2 days—it is time to recognize that the RFS is producing too many 

biofuels that increase greenhouse gas emissions, that increase food 

prices, that pollute our air and water, and not enough of the good 

biofuels that really help hold the promise of not pitting our energy 

needs against our food security and environmental needs. And it is 

important to look back and remember that the RFS was once heralded as a way to combat climate change. But according to EPA’s 

own analysis in their 2010 Regulatory Impact Analysis, the RFS 

has actually increased greenhouse gas emission by encouraging 

farmers for plow up millions of acres of land, releasing carbon into 

the atmosphere and releasing nitrous oxide emissions into the atmosphere. 

Again, according to EPA’s own analysis, the rapid expansion of 

corn ethanol increased greenhouse gas emissions in 2012, and will 

continue to increase greenhouse gas emissions for years to come. 

And that is because most corn ethanol is either produced in a natural gas fire dry mill ethanol plant, which, according to EPA, increases lifecycle greenhouse gas emissions by 33 percent when compared to gasoline, or in a coal fire dry mill ethanol plant, which increases greenhouse gas emissions, again, according to EPA, by 66 

percent when compared to gasoline. But that is not all. As farmers 

have applied more fertilizer to millions of acres of new crop land, 

the RFS has also increased the amount of fertilizer that winds up 

in our rivers and streams that, in turn, increases the cost of treating our drinking water. It has increased the amount of water that 

is used in many drought-stricken States. It has increased emissions 

of air pollutants, like particulate matter and ozone, and, as we 

have heard on this panel, increased food prices for consumers. 

That is the bad news. I think the good news is that many secondgeneration biofuels hold real promise because many of these fuels 

convert wastes, not food crops, into fuel. Unfortunately, as you 

heard yesterday, the marketplace is saturated by corn ethanol, 

blocking the commercial development of these much more promising fuels. And so we believe that in order to allow second-generation fuels to gain a foothold in the marketplace, Congress must reform RFS to phase out the corn ethanol mandate. There is simply 

no reason to think that RFS as currently designed is providing sufficiently powerful incentive to develop these new fuels. In fact, all 

of the evidence suggests that RFS is failing to deliver on that 

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sions, revised downward its estimates for cellulosic ethanol production in 2022. 

At a minimum, Congress should level the playing field for these 

second-generation biofuels by making corn ethanol subject to the 

same high greenhouse gas reduction standards as second-generation biofuels. Right now, as I mentioned, most corn ethanol production is completely exempt from any of these greenhouse gas reduction standards. So they are, again, completely exempt from meeting 

these greenhouse gas reduction standards under the 2007 Act. And 

according to EPA’s 2010 Regulatory Impact Analysis, increasing 

greenhouse gas emissions. 

What is more, phasing out these food-to-fuel mandates would, as 

you have just heard, create a level playing field for livestock operators, for food manufacturers, for restaurant owners, who are paying 

more for food and feed. 

I would like to just close by thanking you for reviewing these 

issue. We have now had many years of experience with the RFS. 

I applaud you all for recognizing that now is the time for reform, 

and we do look forward to working with you to come up with constructive ways to help bring these promising second-generation 

fuels to the marketplace. Thank you. 

Mr. WHITFIELD. Mr. Faber, thanks very much. And thank all of 

you for your testimony. We appreciate your taking the time to be 

here. 

[The prepared statement of Mr. Faber follows:] 

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Mr. WHITFIELD. I am going to recognize myself for 5 minutes of 

questions. We actually have votes on the floor. And, unfortunately, 

there is like eight or nine amendments. It is going to take some 

time. So I know members are interested, have a lot of questions. 

I will go and ask mine now and maybe we will get to Mr. Rush. 

And then hopefully, you all can go down to the cafeteria and have 

a sandwich or something for an hour. But I do apologize in advance 

for this inconvenience. 

As I said, we have had a number of hearings on this. And it is 

a complex topic. Initially, when the Renewable Fuel Standard was 

adopted, there were three basic reasons for doing so. One was less 

reliance on foreign oil, the second was to revitalize the rural areas, 

and the third reason was to reduce greenhouse gas emissions. And 

so the question I would like to ask each one of you is, if those were 

the three primary reasons given for the adoption of Renewable Fuel 

Standard, the International Energy Agency recently said that within a short period of time, 5, 6 years, America will be the number 

one oil producing country in the world because of recent finds in 

new fields like the Bakken Field, which means that one of the reasons for this standard, being less dependent on foreign oil, seems 

to be less important. 

The second reason is that we reduce greenhouse gases. Well, Mr. 

Faber, in his testimony, points to studies. And I will just read from 

a few of them here. ‘‘Researchers found that the cumulative greenhouse gas emissions caused by corn ethanol for the period between 

2015 and 2044 will be about 1.4 billion tons, or 300 million tons 

more than emissions from an energy equivalent of gasoline.’’ And 

they say that actually EPA’s original research was wrong. And 

then it says, ‘‘The National Academy of Sciences found that overall 

production and use of ethanol was projected to result in increases 

in the pollutant concentration. Those projected air quality effects 

from ethanol fuel would be more damaging to human health than 

those from gasoline use.’’ And I could go on from there. 

Now, I am from a rural area. And I could tell what you what, 

every time I go home, our corn growers, our soybean growers there 

are thrilled because great yields, good prices, and the economy is 

going strong. But if the validity of doing a program like this, as 

complex as it is, only one reason given initially still appears to be 

out there, I would ask each one of you if you could just give me 

your view on, since we are only fulfilling now it looks like maybe 

one of the original intents of the standard, of why should we continue it? And, Ms. Johnson, if you wouldn’t mind responding, I 

would appreciate it. 

Ms. JOHNSON. Thank you for that question. Several things. We 

have data to prove that corn production alone has reduced greenhouse gas emissions by 36 percent. And we are doing that with 

new technologies and farming smarter and putting nutrients into 

the crop precisely using GPS and computers so that those techniques are helping on that end. And in the end, on the corn to ethanol, the EPA asked that corn ethanol reduced greenhouse gas 

emissions by 20 percent by 2022, and the corn ethanol business has 

already met that. 

270 

Mr. WHITFIELD. So, Ms. Johnson, sorry for interrupting. I have 

a minute and 24 seconds left. But basically what you are saying 

is that your studies indicate that there has been a reduction? 

Ms. JOHNSON. Correct. 

Mr. WHITFIELD. And what about the oil independence issue, as 

we produce more and more oil, what would you say to that? 

Ms. JOHNSON. The amount of gallons of ethanol added to the fuel 

supply has reduced it. Yes, we are using less gas here. Yes, we 

have more gas here, but it is harder to get that kind of gas out of 

the ground, and the carbon footprint of that will be bigger also. So 

I think we have to look at going forward in the future these—these 

products are still fossil fuels, and they are still, at some point, finite and we need to develop renewable fuels. 

Mr. WHITFIELD. Mr. Roenigk, do you have a comment? 

Mr. ROENIGK. I would just observe what Dr. Hurt set about almost a trillion dollars increase in land values. That is great for the 

people who own that land, wanted to sell it. But if you are a young 

farmer trying to get into agriculture, and we do need some young 

farmers out there, we have raised a very high hurdle for them to 

overcome to continue to be in animal agriculture, 

Mr. WHITFIELD. But is it still your position it should be repealed? 

Mr. ROENIGK. Our position, there needs—if we cannot put flexibility into the program, then we need to fix it. And if we can’t fix 

it, then we need to repeal it. 

Mr. WHITFIELD. Mr. Anderson. 

Mr. ANDERSON. Thank you. I am just a small businessman. So 

when we talk about these other things, it is very difficult for me. 

But on a daily basis, the thing I can speak about is I have a responsibility to my 130-plus employees. And I know that the rising 

of the food commodity prices has put a severe impact on us, not 

only at the restaurant, but even in the grocery stores. And that has 

made it very difficult for everybody to pay higher prices for gas and 

for food at this time. 

Mr. WHITFIELD. Mr. Hurt. 

Mr. HURT. Yes, I think there has been enough change that we 

need—Congress should look at the Renewable Fuel Standard, and 

implementation is going to be very difficult given the high amounts 

of additional biofuels that are to be produced. 

Mr. WHITFIELD. Mr. Faber. 

Ms. FABER. I would just add that it is not EWG’s view, it is both 

EPA’s view and the National Academy of Sciences’ view that the 

corn ethanol mandate has increased greenhouse gases. They wrote 

in 2011 that, ‘‘regardless of whether the co-product is sold wet or 

dry, corn grain ethanol has life cycle greenhouse gas emissions 

higher than gasoline in 2012 and 2017.’’ So I think we don’t need 

to get into this fight of dueling studies. The experts, EPA and the 

National Academy of Sciences, have already drawn the conclusion 

that especially in the short run when we need greenhouse gas reduction the most, corn ethanol is increasing emissions by increasing the amount of carbon that is released into the atmosphere. 

Mr. WHITFIELD. Thank you very much. And now, Mr. Rush, 

would you like to ask questions now or do you want to come back? 

Mr. RUSH. I think it would be appropriate given the fact that we 

have got, like, seven votes left. 

271 

Mr. WHITFIELD. OK. I know a number of members have questions for you all. And I do apologize. But if you don’t mind, we do 

need to go vote. There is going to be seven or eight votes. It may 

take 50 minutes, 55 minutes. So if you all would come back at 

about hour from now, we would genuinely appreciate it. With that, 

we will recess the hearing for one hour. Thank you. 

[Recess.] 

Mr. WHITFIELD. At this time, I will recognize the gentleman from 

Colorado for 5 minutes of questions. 

Mr. GARDNER. Thank you, Mr. Chairman, and I appreciate the 

witnesses’ time and their time for being here. Yesterday, the witnesses were able to provide entertainment, insight, arguments, and 

a lot of good information on the impact of renewable fuel standards 

on fuel production sales and usage. 

Today, I thank you for the opportunity to talk about the impact 

it has on agriculture, on food prices around the country. And I 

mentioned yesterday about my district’s strong agricultural sector, 

not only some of the Nation’s leading corn producers on the county 

basis in the country as well as farmers and ranchers throughout 

Colorado, and the 4th congressional district, the 11th largest ag 

district out of the 435 districts here in Congress. 

And to William Roenigk, is that Mr. Roenigk? 

Mr. ROENIGK. Yes. 

Mr. GARDNER. Of the National Chicken Council. I asked a similar question yesterday to Bob Dinneen, president of the RFA. Could 

you talk about the coke product from ethanol product to distill his 

grains, how they impact livestock operators that you represent? 

Mr. ROENIGK. Yes, thank you. Great question. You are referring 

to DDGs? 

Mr. GARDNER. Yes. 

Mr. ROENIGK. It is a great product if you are ruminant. If you 

are a chicken cattle, dairy cattle, but if you are single stomach animal like poultry and hogs, doesn’t work so well, and even works 

less today than it did a few years ago. Now the technology is such 

that they are able to take the oil out of the DDG. So, before there 

was some energy from the oil, but now that energy is gone, and so 

for poultry, very difficult to really get much benefit from DDGs, 

and so we use a very limited amount, in most cases, less that 5 

percent. Having said that, it is good that the—our competitors in 

large animals can use it and take some of the pressure off the corn 

market. 

Mr. GARDNER. And your conversation as livestock operators, they 

believe that DDGs have actually helped with their profitability; is 

that correct? 

Mr. ROENIGK. Yes, I would agree. 

Mr. GARDNER. Ms. Johnson, to you, I got my start in Congress 

actually as an intern working in the Corn Growers Office, which 

right now represents the 24th highest producing corn district in 

Congress. In your testimony you talk about how the RFS has benefited rural communities. Can you elaborate on what has happened 

to farm income in the United States since we adopted the RFS in 

2005? 

Ms. JOHNSON. Sure. As I say in my written testimony, before the 

days of the RFS, farmers were facing prices of $2 corn and below, 

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and so actually, as corn growers, we got together with other entrepreneurs and decided what we had to do to develop markets, and 

ethanol looked like it was promising growth because we were fulfilling our needs to the domestic livestock industry and our exports, 

and so we needed a new market. So, it has been very important 

to us to help work with that and develop it. 

Mr. GARDNER. Thank you. Talk a little bit again about what has 

happened with government payments to farmers in that same time 

period. 

Ms. JOHNSON. Sure. Well, at that time, unfortunately, we had to 

get half of our income from the government just to be able to survive, and some of us that are old enough like me have been 

through the 1980s and we have seen what that can do to farms and 

farm families. So, now we are able to get our income from the marketplace. 

Mr. GARDNER. And, in your testimony, you talk about RFS impact on food prices. Mr. Hurt has made some comments about that 

as well. Would you further elaborate on that a little bit? 

Ms. JOHNSON. Sure. As the Secretary of Agriculture, Tom Vilsack 

has said it, at this time, the American consumer can leave the grocery store with more money in their pocket even with food prices 

today the way they are, and have more disposable income to spend 

on other things. And corn gets $0.03 out of the food dollar that the 

consumer has to spend. 

Mr. GARDNER. And can you talk about that a little bit. I think 

in your testimony, you talk about how it was $0.16 of every dollar 

spent, the farm share being $0.15 now lower. Can you talk a little 

bit about that impact? 

Ms. JOHNSON. Sure. So, for the food dollar, 84.5 cents goes into 

marketing, or the petroleum cost to get that food product to market, and of that dollar, then the 15.5 cents, as you say, goes to the 

farm, and of that, only $0.03 can be attributed to what the corn 

price is in that product, whether it is hamburger or chicken or beef 

or pork. 

Mr. GARDNER. And you know, there are various biometric requirements within the renewable fuel standard, and do corn growers, your organization supportive of new biofuels and cellulosic ethanol coming to the market? 

Ms. JOHNSON. We do. As was said earlier that we are blocking 

cellulosic and new biofuels coming in, that couldn’t be further from 

the truth. We welcome them, and we think that corn ethanol is the 

basis and the foundation of that happening, and with the RFS, that 

provides the incentive that there is certainty, just like when corn 

ethanol started out, that those industries can build on that and 

have innovation and technology coming to improve and start the 

next generation. 

Mr. GARDNER. Thank you. And Mr. Chairman, I yield back. 

Mr. WHITFIELD. Gentleman yields back. At this time, I recognize 

the gentleman from Illinois, Mr. Rush, for 5 minutes. 

Mr. RUSH. Thank you, Mr. Chairman. Following up on my friend 

from Colorado’s line of questioning. The issue of providing food 

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ment in the Nation, and making sure that my constituents can afford to put food on the table is of the highest concern for myself. 

In various meetings regarding the RFS, my office has received 

some conflicting information on the impact that this policy has had 

on food prices. Some have insisted that the RFS has helped to raise 

food prices due to the use of corn ethanol, while others have stated 

in writing, energy costs have played a much larger role in raising 

food prices. 

During today’s panel discussion, in fact, Mr. Dinneen stated and 

showed a pretty convincing slide—yesterday’s panel, rather. Mr 

Dinneen showed a pretty convincing slide demonstration that the 

year end global food prices and global fuel oil prices rose and fell 

almost simultaneously between the years 2000 to the present. 

And I want to ask all the panelists today, as I understand it, as 

many witnesses confirmed yesterday, the RFS has actually helped 

to reduce fuel costs, at least in the transportation sector. I want to 

learn more about the impact that repealing the RFS would have on 

food costs, if any? 

So I want to go down the line and ask each of you to briefly 

share your views on what has been the greatest impact on food 

costs, the RFS or rising energy costs? 

Separate question. What impact would repealing the RFS have 

on the price, the price that Americans pay for food? 

So I am going to go down the line, beginning with you, Ms. Johnson. Can you answer those questions? 

Ms. JOHNSON. Thank you very much. We believe that it is the 

rising cost of fuel that is costing people more for their food dollar. 

There is a high correlation between the price of a barrel of oil and 

what people pay for food because as transportation costs go up, and 

we believe that the impact of removing that would be deleterious 

to your constituents also, because the average family saves $1,200 

a year out of their family budget by reduced fuel prices because of 

having ethanol at the pump, $1.09 per gallon on the average to 

save. And I buy both food at the—groceries and fuel for my family, 

and as corn prices have gone down this year 30 percent, I have yet 

to see food prices come down 30 percent. So, we will see if they do, 

and then we will decide if there is a correlation between the two. 

Mr. RUSH. Mr. Roenigk. 

Mr. ROENIGK. Yes, thank you for the question. With all due respect to Ms. Johnson, I would like to suggest the following example. She is making so much per acre on growing corn, but let’s say 

Green Giant came to her and said, OK, I would like you to grow 

green beans for us. I suggest that Ms. Johnson would say, I am 

making this much on corn. If you want me to grow green beans, 

I need to make at least that much on green beans. 

So when corn says we only increase food a little bit because we 

are only so much of the market, it is not just one boat in the harbor. It is raising all the boats in the harbor. So you have to look 

at all the food costs. Corn competes with all the other crops. If you 

are a farmer, you are going to produce what is most profitable, and 

if somebody else wants you to produce something other than corn, 

it has got to be least as profitable, or more so. So the argument 

needs to be much broader than just what is the cost of corn. 

274 

Mr. RUSH. Mr. Anderson, do you have anything that you want 

to add to this? 

Mr. ANDERSON. Yes, sir, Congressman. There are a couple of 

things. 

One, when we talk about the increase in food, I can tell you that 

the Bureau of Labor Statistics states that from 2005 to 2012, that 

food has outpaced core inflation during that time, 25 percent to 16 

percent. When we talk about the price of higher food, I can tell you 

that I come here and can tell you that, in my restaurants, food has 

increased for the last 5 years. In a QSCC, which is the Quality 

Supply Chain Coop at Wendy’s, they study it every day, and that 

is a fact as far as we are concerned. 

Additionally, it impacts everybody because, as was just stated, 

whether it is too much corn being planted, then it takes away from 

soy beans, so then the soy bean price go up. So, the cost to consumers has gone up significantly and the cost for us in the restaurants has gone up significantly for the same reasons. Thank 

you. 

Mr. RUSH. Thank you. Mr. Hurt. 

Mr. HURT. My evaluation would be that there has been a direct 

correlation. RFS has raised food prices. There is always a question 

of what is the magnitude. I think the direction is on the upside. 

We have seen food inflation be about a percent higher than the 

core inflation per year on average. Our evaluation is about half of 

1 percent a year as related to the commodity food portion of that, 

kind of the farm value of that. 

As we work that through, that ends up being about $7 billion a 

year on our food system. We have a very large food system and 

that there are some additional higher costs. Energy is also very important in that, and splitting those out, exactly which one is the 

bigger contributor, I am not well qualified, but I think they both 

have been positive. 

I would also mention that food inflation, I would expect to now 

drop below the core inflation. We have a good crop in the United 

States finally here in 2013. We are going to see moderation in some 

of these basic food prices like our corn, soybeans, wheat. That is 

going to help to begin the process of moderating food price inflation 

even more. 

Mr. RUSH. Thank you. Mr. Faber. Thank you, Mr. Chairman. 

Mr. FABER. I would just add that there are many factors that are 

contributing to food inflation. When USDA chief economist Joe 

Glauber was here a month ago, he attributed about a 30 percent 

of the increased price of corn to the RFS, but there are many factors that are contributing to higher corn prices and ultimately 

higher food prices, including energy prices, strong global demand 

for our commodities. 

The RFS is one of the factors that Congress can control. So of 

all the things that impact the price of corn and ultimately the price 

of food, energy prices, the weather, strong global demand, the 

amount of ethanol that we blend into gasoline is one of the factors 

that we can actually change. 

Mr. WHITFIELD. Thank you. The gentleman’s time has expired. 

At this time, I recognize the gentleman from Illinois, Mr. Shimkus, 

for 5 minutes. 

275 

Mr. SHIMKUS. Thank you, Mr. Chairman. I think, since we are 

getting close to the ending of the whole panels, I think it would be 

instructive just to talk about ethanol and how it actually got developed. And everybody talked about 2005, but it wasn’t in 2005 that 

developed ethanol into the markets. It was the Clean Air Act of 

1992 because it caused the fuel to burn cleaner, it was tailpipe 

emissions, and that was the entry. It was also the entry with another product called MTBE, which eventually became a persona 

non grata because of some odor and discoloration, not toxicity but— 

so MTBE got left, ethanol started going into that market for the 

Clean Air Act. So then it was 2005 that we made the transition of 

energy security, decreased our reliance on imported crude oil by 

having renewable fuels. 

The environment has shifted quite a bit with our own ability to 

produce fracking and going through our depleted wells using new 

technology and getting more oil out of them, and that is kind of 

what stirred up this debate again. 

But I think the basic premise is that in any business, and as the 

government has sent a signal, and you have made capital investment to respond to that Federal law, I think no one would be supportive of the government changing the rules to bankrupt those 

who invested private capital to meet the law of the national government. Is there anyone? No. 

So, that is part of this debate, that we made promises, investment, private capital to build refineries. Ethanol refineries, a lot of 

times in rural America where they have nothing but fields, now 

they have got a little refinery there, it is paying taxes, as Pam has 

mentioned. So that is why we are trying to find the sweet spot in 

this. 

Scott and I appreciate your acknowledging that. We didn’t get 

much of that yesterday, but we think we will as we move forward. 

But Scott, let me ask you, we understand the new world of cellulosic. There will be many of us who, and I think even my friends 

on the other side, it is going to be built on the foundation of cornbased ethanol. So I would hope that, if that is the future you-all 

want to go—— 

Mr. FABER. Yes. 

Mr. SHIMKUS. Your testimony says reduce. I don’t think that is 

going to pass the political scrutiny, but if it is, build on that future, 

then we have got an area we can work together. 

Mr. FABER. Here is the challenge, and I think—we see this problem the same way, and one of your witnesses made this point yesterday that I can’t pour this jug of water in this cup, and that is 

fundamentally the problem with the RFS we have today. 

Mr. SHIMKUS. But that is why we are having this hearing. That 

is exactly why we are here. 

Mr. FABER. But, and I think one of the things that was not said 

explicitly, but we all know, is that we will be in an E10 environment because of the engine and infrastructure hurdles for some 

time. 

Mr. SHIMKUS. All right. My time is expiring, but you can’t put 

14 ounces in a 12-ounce cup. 

Mr. FABER. Right. 

276 

Mr. SHIMKUS. But that is where we need your help. How do we 

make these changes? And I want to go to Pam real quick, because 

I want to ask this question. 

Can you, representing National Corn Growers, a lot of my 

friends, can you envision a modified RFS that avoids the near term 

pitfalls that would be acceptable to American corn farmers? 

Ms. JOHNSON. Yes, I can. 

Mr. SHIMKUS. OK. 

Ms. JOHNSON. And I think some of the problems that we are encountering now could have been avoided because when the law was 

written in 2005, we knew that one of the goals was to increase the 

level of blending renewable fuels. So part of that problem is a willingness to make sure that those renewable fuels are available. 

So it comes as no surprise to me in 2013 that now—it does not 

come as a surprise to me that we need to blend those fuels. 

Mr. SHIMKUS. Right. And let me go to Mr. Roenigk real quick, 

because I want to get—because I am from livestock sector, not 

chicken, we have the other white meat, which we are very proud 

of, and of course, DDGs are a big part of what they have done to 

offset their cost. Can you and the Chicken Council see a way in 

which, kind of the same question, and modify RFS that avoids 

some of these near term pitfalls? 

Mr. ROENIGK. We need flexibility. It is clear that the current 

RFS doesn’t have flexibility, and so we are open to reasonable alternatives that would provide for those situations where there is 

not enough corn and we can all share in that situation. 

Mr. SHIMKUS. And let me finish on this, and just because my 

time is very close. Two articles when I was flying out talked about 

the high price of gas. Gas is going up again for a lot of reasons, 

and in both these articles, there was not a single mention of ethanol RINs. When you take the—when you take this policy paper 

from the World Bank, May 2013, I read it here numerous times, 

it says this, it concludes that the most of the price increases—this 

is about food increases, prices of food increases from the World 

Bank. It concludes that most of the price increases are accounted 

for by crude oil prices, more than 50 percent, followed by stock-touse ratios and exchange rate movements which are estimated 

about 15 percent. Crude oil prices mattered most during the most 

recent boom period because they experienced the largest increase. 

So, we can have this food-fuel fight all the time. It is transportation costs, it is crude oil, it is the barrel, and it is the truth. 

So, Mr. Chairperson, thank you, and I yield back my time. 

Mr. WHITFIELD. The gentleman yields back. At this time, I recognize the gentleman from Virginia, Mr. Griffith for 5 minutes. 

Mr. GRIFFITH. Thank you, Mr. Chairman. I appreciate it, and 

start with Mr. Faber. 

Mr. FABER. Yes, sir. 

Mr. GRIFFITH. In your testimony you state that the EPA’s own 

analysis has since shown that the lifecycle greenhouse gas emissions of corn ethanol were higher than gasoline last year, 2012, and 

will be higher in 2017. So, the RFS was intended to introduce 

cleaner, more efficient fuels, and the largest existing component, by 

far, corn ethanol is less efficient and dirtier than gasoline, question 

mark; is that true? 

277 

Mr. FABER. That is correct. That is according not only to EPA’s 

analysis, but the National Research Council’s 2011 report as well 

as other studies that have looked at—that have compared the 

greenhouse gas emissions associated with corn ethanol to the energy equivalent amount of gasoline. 

Mr. GRIFFITH. And that deals with the production costs and so 

forth, correct? Not just the burning of the—— 

Mr. FABER. In part, because of the carbon debt created by corn 

ethanol. When we encouraged farmers to plow up millions of acres 

of land to produce more corn, we released an extraordinary amount 

of carbon into the atmosphere. We applied a lot more fertilizer that 

went into the atmosphere in the form of nitrous oxide, which is 300 

times more potent greenhouse gas than carbon dioxide. 

And in combination, that has increased in the short run the 

lifecycle greenhouse gas emissions associated with corn ethanol. 

Mr. GRIFFITH. All right. And so should corn ethanol continue to 

be a part of the RFS from an environmental perspective? I understand there is always a balance. 

Mr. FABER. If our goal is to reduce greenhouse gas emissions, 

and I think this goes back to Mr. Shimkus’ point, we have to find 

room in the E10 pool for these promising cellulosic biofuels. If I 

produced a cellulosic ethanol today that got a 50 or 60 percent reduction in greenhouse gas emissions, there simply would be no 

place in the pool because the pool is only 13.4 billion gallons and 

the corn ethanol industry has the capacity to produce 14.7 billion 

gallons. So I think we just need to create a foothold in the existing 

E10 pool for these new biofuels that really promise to deliver on 

greenhouse gas reductions. 

Mr. GRIFFITH. All right. Thank you. 

Mr. Roenigk, last year we had a drought across a big chunk of 

the country, bad weather scenario. I was one of those who asked 

the EPA to grant a waiver from the RFS. What, in your opinion, 

would it take for the EPA to recognize severe economic harm and 

waive the mandate? What kind of conditions do you think they 

would have to have? 

Mr. ROENIGK. I can’t speak for EPA what it would take for them 

to do that, but it is difficult to imagine a scenario, short of a, whatever definition of a crisis is, but they have demonstrated that the 

current regulations, it is basically impossible to rise to that level. 

Mr. GRIFFITH. From your opinion, last year probably would have 

met the test; is that correct? 

Mr. ROENIGK. I think it came very close. It didn’t go over that 

hurdle and EPA felt that wasn’t enough, so I’m not sure what the 

situation is. I was pleased to hear Dr. Hurt, I won’t say guaranteed, but basically say the corn is in the crib or in the bin, but 

those of us in the chicken industry have learned not to count the 

chickens till they are hatched. 

And so I am hoping the corn is in the crib this fall and we can 

all perhaps breathe a little easier, but to go back to your question, 

I can’t speak for the EPA, but it is difficult to imagine under current rules what it would take for them to recognize that. 

Mr. GRIFFITH. All right. And Mr. Anderson, your restaurant 

group has been vocal about repealing the RFS. You were asked 

what factors were out there, you listed that one. Of course, transVerDate Nov 24 2008 12:30 Aug 05, 2014 Jkt 037690 PO 00000 Frm 00285 Fmt 6601 Sfmt 6601 F:\MY DOCS\HEARINGS 113\113-73 CHRIS
278 

portation is a big one too, but would I be wrong in saying that another cost driver, not only at your restaurants, but in the grocery 

field is the refrigeration of the food, and that is usually electric and 

the jump in electric prices has also been one of the concerns that 

are cost drivers for you-all? 

Mr. ANDERSON. It would be difficult for me to speak on that as 

far as specifics. 

Mr. GRIFFITH. Sure. 

Mr. ANDERSON. What I can tell you is that, again, the cost of 

corn has impacted the proteins, which we use. You have cattle, you 

have dairy cattle, you have got chickens, you have got the hogs, all 

of them use corn. You also, we use buns. All of these things have 

the food in it and it has impacted us dramatically in the cost of the 

products. 

Mr. GRIFFITH. And somebody mentioned earlier, and it may have 

been you. I apologize because I don’t remember, but you know, if 

you raise the cost of corn, the soybeans—it might have been you, 

Mr. Roenigk, but if you are producing more corn, then the price of 

soybeans goes up, that would be true for the wheat, too, when you 

referenced the buns, that is what you are talking about? 

Mr. ANDERSON. Exactly. Because what would happen is, as corn 

goes up, more people want to plant corn. Well, if you plant more 

corn and there is only so many acres that can be planted, then 

there is less soybean and then less wheat, and so we have seen significant increases in soybean, and we use that to make our chili 

and other products, and obviously, our buns, which we sell quite 

a few of those also. 

Mr. GRIFFITH. All right. Thank you very much, and I see my time 

is up, and I yield back, Mr. Chairman. 

Mr. WHITFIELD. The gentleman’s time is expired, and at this 

time, I recognize the gentleman from Louisiana, Mr. Scalise for 5 

minutes. 

Mr. SCALISE. Thank you, Mr. Chairman. And again, thank you 

for having this series of hearings. This is the third panel that we 

have heard from, and a lot of really good interesting perspectives 

on the renewable fuel standard. I wasn’t here in Congress when it 

passed and was updated, but I have seen and heard a lot of firsthand stories of the problems that it is causing, whether intended 

or unintended, but serious consequences that we are seeing 

throughout many parts of our economy, and again, it is still in the 

early stages as we are approaching the blend wall, by all estimates, 

by next year, or at the latest at the end of next year, we would be 

hitting that blend wall, and then you have even deeper problems. 

And so that is why we are here is to talk about what those problems are and then solve this problem. And I know I support legislation that would solve it by repealing the mandate because clearly 

it is not working the way it was intended. But when we get to some 

of the points that have come up in some of our earlier panels, we 

had, in our first panel yesterday, we had a gentleman who talked 

about the impact on the price of food, and I know some of our panelists here testified about how RFS, one of its intended or unintended consequences, and an increase in food prices that you are 

experiencing, one of our panelists said that the—I think his quote 

was the impact of the renewable fuel standard itself on food prices 

279 

is indiscernible. And I would like to, Ms. Johnson, get your take 

on it, and then also ask Mr. Roenigk and Mr. Anderson as well, because I know you each have different perspectives on it, but that 

was one of the panelists yesterday. 

Ms. JOHNSON. Thank you for the question, and we can get you 

more information from the consumer price index, but some of the 

data that we have, if corn is $6 a bushel, the corn equivalent is 

$0.27 for a pound of beef, $0.38 for a pound of pork, $0.27 for chicken, if it drops down to $4, which it is heading there, we had rain 

across the midwest, as Dr. Hurt said, and we are below—— 

Mr. SCALISE. Would you agree or disagree when he said that the 

renewable fuel standard itself had no impact or an indiscernible 

impact on the price of food? 

Ms. JOHNSON. It had some impact, but the greater impact is from 

the price of a barrel of oil and energy prices, and we can get you 

the data on hamburgers, chicken, pork, milk, eggs. 

Mr. SCALISE. Well, let me ask the chicken—the chicken man, Mr. 

Roenigk. I apologize if that’s—— 

Mr. ROENIGK. That is fine. I appreciate that. 

Mr. SCALISE. If you can give me kind of your perspective on what 

you have seen. 

Mr. ROENIGK. Sure. The rule of thumb is, if a bushel of corn goes up $0.30 a bushel, you have added one penny to the cost of producing a live weight chicken. And the same way on soybean meal. 

Of a ton of soybean meals goes up $30 a ton, you have added $0.01 

to the increased cost production of producing a live chicken, so that 

is the rule of thumb. It is a pretty direct correlation, and there is 

not a whole lot of substitutes, and you—if you want to produce 

chickens and you got them in the field, you got to feed them and 

you absorb the cost or try and pass it on. 

Mr. SCALISE. Let me ask you, Mr. Anderson, because in your testimony, I think it is the closest thing I have seen to an exact number, to a rough estimate of a dollar figure that has been attached 

to increase in the cost of food to consumers by the renewable fuel 

standard. Taking out fuel, and you know, there are all other factors 

going in, but the renewable fuel standard is one of those factors. 

I don’t see a lot of people disputing that it is, and so, you know, 

if it is, then there has got to be an amount attached to it. 

What you are saying is the amount that you are seeing at your 

stores is $30,000 more expense of food due to the renewable fuel 

standard; is that right? 

Mr. ANDERSON. That is correct. And just to tag on right there, 

it takes 8 pounds of corn to make 1 pound of beef, so you can imagine as the price goes up, what that does to the cost of beef. 

Additionally, it wasn’t just us that came up with the $30,000, 

you know. We would be happy to provide the 2012 report by 

PricewaterhouseCoopers that confirmed what our analysis at QSCC 

was already thoroughly studying, and that is the fact that the RFS 

does distort food commodity prices so much, that whether you are 

a restaurateur, a supplier, or a consumer, that you are forced to 

pay more for the price of food. 

Mr. SCALISE. Thank you. And I mean, this is passed on to consumers. I would imagine it is not just like, OK, it is another 30 per 

store, 30,000 per store, and that is just money that comes out of 

280 

the sky. I mean, that is money that somebody let goes, and goes 

to a restaurant, they are going to have to be paying more money, 

in essence, $30,000 per store more that is going to cost consumers, 

every store, and these are real prices that are affecting people. 

One last thing I want to mention is, we had somebody testify 

yesterday about the impact on—from Briggs & Stratton, impact on 

motors, one of the many other detriments that are coming if you 

get to E15. There are many tests that have been run by not third 

parties, but the actual companies that make some of these motors 

and engines that have seen and experienced tremendous damage to 

engines, and I don’t know if anybody wants to comment on it, dispute it. I have heard nobody dispute that, but that is a serious consequence that has been out there, real testing that has been done 

that is a detriment that many consumers are facing, and frankly, 

are very concerned about when they see this coming down the road. 

Mr. ANDERSON. Congressman, may I respond to the price increase piece. The fact is that we can’t pass these costs, these additional costs onto our consumers right now. And there is two reasons right now: One, they are already strapped by paying a higher 

price for food and for gas. 

Mr. SCALISE. Because they are paying it, too, at the grocery. 

Mr. ANDERSON. Exactly. Secondly, we are in an extremely competitive market, and people will vote with their feet on price increases. So this is something that has been very difficult for us, 

and we have just had to absorb this increase, a significant portion 

of it. 

Mr. FABER. Congressman, we carefully looked at these engine effects issues, and clearly, most of the engines for boats, 

lawnmowers, augers, chainsaws, small engines are simply aren’t 

equipped to run on higher blends, and the cost of having to convert 

all of those engines would be enormous. So, it seems to me that our 

focus ought to be how do we—how do we bring more advanced 

biofuels to a market that can compete fairly for that pool of E10, 

that E10 pool and not try to force every consumer and every car 

owner in America to switch engines in order to meet the needs of 

one particular industry. 

Mr. SCALISE. Why we need to stop. Thank you. Mr. Chairman, 

thank you, I yield back the balance of my time. 

Mr. WHITFIELD. The gentleman’s time has expired. At this time, 

Mr. Braley and Mr. Matheson are on the Energy and Commerce 

Committee. They do not happen to be on this subcommittee, but 

both of them have been so focused on the renewable fuel standard 

that they come to these hearings, and we give them an opportunity 

to ask questions, so I recognize Mr. Braley for 5 minutes. 

Mr. BRALEY. Thank you, Mr. Chairman. Is anyone on the panel 

a history buff, by chance? 

All right. Mr. Faber, Mr. Anderson, have you heard of something 

called ‘‘The Whiskey Rebellion’’? I am going to pit the chairman 

against Mr. Scalise with this question, so I want you to pay close 

attention. 

Isn’t it true that we have been refining corn in this country a lot 

longer than we have been refining petroleum? 

Mr. FABER. People have been refining corn to produce ethanol 

since the Persians, absolutely. 

281 

Mr. BRALEY. So, when we talk about some of these issues, and 

we are talking about these trade-offs, I think it is important to 

keep that in perspective, because when you talk about the tradeoff, Mr. Roenigk, between growing green beans in Iowa and corn 

in Iowa, you are talking about a false choice, because people grew 

corn in Iowa for over 150 years before ethanol plants started appearing on the prairies. You knew that. And they grow corn in 

Iowa because the climate and the soil conditions make it very conducive to growing corn, and it is much more conducive than growing green beans. And one of the things that we have to focus on 

in this hearing is the actual trade-offs that make a difference to the 

people in this country. 

One of the things that you talked about in your testimony, Ms. 

Johnson, is how the National Corn Growers are not opposed to new 

generation biofuels that can take us beyond corn-based ethanol, 

and in fact, one of the things that we have been talking about is 

the demand that corn ethanol production places on the cost of food 

for livestock, and yet one of the byproducts of ethanol production 

is distiller’s grains, which are used by many livestock producers as 

a feed source. 

So, that is one of the benefits that comes from ethanol production, and another thing that can happen is, as we move to cellulosic 

ethanol, when in fact there are two ethanol plants in Iowa that are 

cellulosic-based, then you use corn stover and the byproducts of the 

corn stock to generate biofuels as well, correct? 

Ms. JOHNSON. Right. 

Mr. BRALEY. One of the things that you mentioned was this photograph that was up on the screen showing the prices for E85 ethanol in St. Ansgar, Iowa, which is in my congressional district, 2.24 

a gallon, which is a clear benefit to consumers who are interested 

in using advanced biofuels. And I just happened to check, in addition to that price in St. Ansgar, you can buy E85 for 2.39 in 

Westside, for 2.49 in Riverside and Neal and Urbandale, Iowa, so 

this is a product that is already reducing the cost of fuel for consumers in our state, correct? 

Now, one of the things that we talked about was the trade-offs 

that are impacting the price of food. And Mr. Anderson, you grew 

up in the Garden State of New Jersey? 

Mr. ANDERSON. Yes, I did. 

Mr. BRALEY. You did. And you talked about the impact of rising 

corn acres on soybean planting and the loss of acres to soybeans. 

Do you remember that? 

Mr. ANDERSON. Yes. 

Mr. BRALEY. Have you ever been a farmer? 

Mr. ANDERSON. No, I have not. 

Mr. BRALEY. Worked on a farm? Do you understand the concept 

of crop rotation in States like Iowa and Illinois where Mr. Shimkus 

lives, and Nebraska. They call themselves the Corn Husker State, 

but nobody is husking corn there anymore that I know. Do you 

know what crop rotation is and why farmers alternate between 

corn and soybeans? 

Mr. ANDERSON. Yes, sir. 

Mr. BRALEY. It is to replenish the soil by putting nitrogen back 

in if it is taken out by the corn crop, and that is why in States like 

282 

ours you see large acres of production of corn and soybeans. And 

one of the things we know about soybeans is that they are used to 

also generate a renewable fuel called biodiesel. You are aware of 

that? 

Mr. ANDERSON. Yes, sir. 

Mr. BRALEY. And in fact, many restaurants in this country have 

gotten into the renewable fuels business by using their waste fats 

to deliver to companies that are using it to convert it into biofuels, 

correct? 

Mr. ANDERSON. Correct. 

Mr. BRALEY. So some of the members of your restaurant association are also generating income from the biofuels industry to help 

reduce the cost of operating their businesses. 

Mr. ANDERSON. I can assure you that the income from that 

grease comes nowhere near the $30,000 impact from the increase 

in the RFS. 

Mr. BRALEY. Well, you talked about the fact that some of the restaurants are faced with the risk of closure because of the RFS. Do 

you remember saying that in your opening statement? 

Mr. ANDERSON. No, I don’t. 

Mr. BRALEY. OK. My recollection is that when you were describing the impact of the RFS on restaurants in the United States, you 

suggested that some of them could be faced with closure if we don’t 

do something about the RFS. So you are not suggesting that. 

Mr. ANDERSON. No, I did not suggest that. 

Mr. BRALEY. All right. With that then, I would yield back, and 

I thank the chairman for extending me this courtesy. 

Mr. WHITFIELD. Well, thank you, Mr. Braley. At this time, I recognize the gentleman from Nebraska, Mr. Terry, for 5 minutes. 

Mr. TERRY. Well, I appreciate that. I appreciate this, and so my 

first question is to Mr. Roenigk. And you talked about the expansion of the corn crop and the additional millions of acres that have 

been used in the fertilizer, and that helps the production of our 

crops, and that they are producing twice as much now, and I just 

want to make clear what you were trying to get at, because I am 

sure you are not saying that we should stay at a process where our 

corn crops and soybean crops should be cut in half. 

Mr. ROENIGK. Absolutely not. 

Mr. TERRY. If you are advocating that we cut our corn crops in 

half as it sounded like you were doing, what would that effect be 

on corn and soybean prices? 

Mr. ROENIGK. If I could clarify. What I tried to say is the term 

‘‘renewable’’ implies, suggests that this is a resource in a natural 

basis continues to be more or less unlimited in terms of being 

available. If you want to produce corn, at least commercially, you 

need to apply commercial nitrogen which comes from a source that 

Congress considers not to be renewable. So that is all I was saying. 

If you don’t use commercial nitrogen fertilizer to produce corn, I 

don’t think you are going to get 160 bushels or per acre. 

Mr. TERRY. Well, I have never heard that argument before that 

if you use fertilizer, it is not a renewable crop. I can’t tell you how 

adamantly I oppose that position. I think it is just silly, frankly, 

because we have used fertilizer on crops for hundreds of years. 

Mr. ROENIGK. I think you should use fertilizer on crops. 

283 

Mr. TERRY. Well, nitrogen is a fertilizer on—— 

Mr. ROENIGK. Is it organic fertilizer or commercial fertilizer 

or—— 

Mr. TERRY. Oh, so it can all be pig crap that we can put on there 

and then it is renewable under your standards? 

Mr. ROENIGK. I am sorry? 

Mr. TERRY. I said ‘‘pig crap,’’ you should be waste. And then it 

is renewable, but only if it is from animal waste. 

I am going to move on. Well, I do want to ask you one thing because—does the chicken industry use distiller grains in their feed? 

Do you mix that up? 

Mr. ROENIGK. Yes. We used to use more, but since the oil has 

come out of the DDGs, we use less of it because the energy is out, 

but yes, we still use a small amount. Some companies use up to 

5 percent, but it is not a preferred feed ingredient. 

Mr. TERRY. OK. So what percentage of it would be mixed in, 5 

percent? 

Mr. ROENIGK. Up to 5 percent. I would suggest the current usage 

is probably something in the 2 to 3 percent range when we look 

across the industry. 

Mr. TERRY. All right. Mr. Hurt, I have two—or Dr. Hurt. It 

should say ‘‘Dr.’’ Up there, and I appreciate that you are taking no 

position in this repeal RFS. 

Mr. HURT. That is safe or unsafe. 

Mr. TERRY. That means supposedly you are neutral. So I want 

ask you a couple of questions, and I have read your testimony, and 

I want to follow up on some concepts that weren’t, I think, taken 

to conclusion. 

So, Mr. Anderson and Mr. Roenigk and Mr. Faber argue just repeal the RFS, do it today, it is the cause of all the world’s problems, and if we repeal it today, what are the consequences? Does 

that have an effect on corn prices and does it have an effect on the 

land prices? 

Mr. HURT. Nobody knows for sure. We will just start with that 

statement. But we think repeal of the RFS does away from cellulose altogether. It is gone. 

Mr. TERRY. Well, if you repeal the total, yes, you will. You will 

repeal advanced—— 

Mr. HURT. Let’s start with the things that—— 

Mr. TERRY [continuing]. Biofuels, ethanol, advanced, cellulosic 

whatever, it is all gone. 

Mr. HURT. Probably goes away if the subsidy, the dollar subsidy 

goes away, biodiesel goes away. Actually, as we look at conventional ethanol, what we have today is an oil industry that has as 

their mixture, their chemistry, they have ethanol in that blend. 

They have ethanol in the blend for two primary reasons, one is oxygenate, that is replacement of MTBE; the second is as an octane 

booster, and they have it because it is economic to have it in their 

mix for octane. They—we understand from the oil industry that 

they refined to about 84-octane now. That is a lower level than 

they would normally, to get 87-octane, they then blend 10 percent 

ethanol. Ethanol is about 113- to 115-octane. That brings that gasoline up to 87. 

284 

Now, what we don’t know is because of the renewable fuel standard, the oil industry knew that they were going to have to blend 

10 percent ethanol, so this, given the fact they have to blend 10 

percent ethanol, this is economic. If we assume that economics continues, then maybe there would not be a collapse in corn use for 

ethanol. Maybe. 

On the other hand, 5 years from now, the oil industry might find 

other ways to oxygenate and octane, so I think it doesn’t say it 

would all go away. In the short run, we don’t think a lot would go 

away. 

Mr. TERRY. I think that is a fair analysis, but Mr. Anderson and 

Mr. Roenigk have advocated no use anymore, so we couldn’t use 

corn-based ethanol for an oxygenate or to increase the octane. 

Mr. HURT. Yes. And again, I think your question was if you take 

away RFS. 

Mr. TERRY. I did. I changed the question on you. 

Mr. HURT. You take away the RFS, the market, the market determines, and then what we are saying is the market would still 

buy some for awhile until the oil industry, perhaps, totally reformulated it. 

Mr. TERRY. Mr. Anderson, wouldn’t you be frustrated if the market still allowed 10 percent blend and it was ubiquitous because of 

octane needs? I mean, you would still would then have Armageddon occurring in the fast food industry. 

Mr. ANDERSON. What I would say to you is that, first of all, we 

are not anti-ethanol. What we are saying is take the mandate away 

and let free enterprise and free market conditions determine the 

cost of the product. 

That way the government is not picking winners and losers. All 

we are doing—— 

Mr. TERRY. You can’t have it both ways. 

Mr. ANDERSON. I am sorry. 

Mr. TERRY. You can’t say eliminate the mandate because the 

mandate for the—that essentially gets you to the 10 percent is 

wrong, but then when Mr.—Dr. Hurt was saying, well, there may 

not be any displacement because the market was pretty much built 

off of that 10 percent, well, you are still going to have Armageddon 

then. So, it sounds to me like you are just against corn ethanol, not 

just market. 

Mr. WHITFIELD. The gentleman’s time is expired. 

I would like to remind all the members that not to change the 

question in the middle of the question. 

Mr. Olson, you are recognized for 5 minutes. 

Mr. OLSON. I thank the chairman. There will be no change in the 

middle of the question from this Congressman from Texas. I would 

like to thank the witnesses for coming this afternoon. I appreciate 

your time and patience with the votes. 

As we were hearing yesterday on this issue, a little different 

group here, but as I said in the hearing, I am not opposed to corn 

farmers, I am not opposed to ethanol, corn-based ethanol. I have 

got some corn production in Texas 22, small, but the western part 

of the county produces corn. Uncle Gus had a farm, corn farm in 

South Central Wisconsin. Every summer he would go up there. 

Guess who worked in the corn field with a hoe whacking the 

285 

weeds? P. Olson getting paid $5 a week. Yay, thank you so much, 

Uncle Gus. 

Mr. TERRY. He had machinery for that. 

Mr. OLSON. Just to make sure, you know, it seems very clear to 

me that the renewable fuel standard is on a path right now with 

some very negative consequences for our economy. One of those 

consequences is related to the impact on families trying to put food 

on the table. 

Last month we had the Department of Agriculture before this 

committee. I asked about the impact of RFS on food prices. Their 

economists say most of these point to about 30 percent of recent 

spikes in corn prices being due to RFS. 

These corn prices trickle into every aspect of our economy. The 

USA Report this spring predicted that high-priced corn and other 

commodities will ‘‘permeate supermarkets,’’ and that, ‘‘stressful inflation for beef and pork will intensify.’’ That hurts families and 

that hurts businesses. 

So my first question is for you, Mr. Roenigk, I hope I pronounced 

that correctly, sir, and I apologize if this question was answered 

while I was off there counting my votes, but we routinely hear from 

supporters of the RFS that it boosts employment for corn farmers 

that, of course, you remember, are heavily present in rural America 

as well, and you point to negative impacts of the RFS. Would you 

argue that the RFS has hurt hiring for employment in your industry, and are you able to put a number on that impact? 

Mr. ROENIGK. Thank you for the question. If I understand correctly, we need corn farmers, corn farmers need us, and to give you 

a specific number as to what that balance should be, I would like 

to get back to you if I could on that. 

Mr. OLSON. That works for me, sir. Thank you very much. 

I would like to talk to you, Mr. Anderson, next question, please, 

sir. And my question for you, sir. I had a Wendy’s franchise owner 

from back home in Texas come to my house about a month ago, 

and I thought we would talk about Obamacare, impact on small 

businesses, tax policy, none of that. We talked about the RFS in 

corn-based ethanol. 

And they agreed, he agreed with your testimony, each of the res- taurants loses roughly $20- to $30,000 per year because of commodity prices in the RFS. So my question is, what does $30,000 

mean to your stores? Where are some things you would otherwise 

be able to do with that money? 

Mr. ANDERSON. Thank you, Congressman. That $30,000 per store 

means a lot, and I will give you two examples. With that additional 

money, I can reinvest in my restaurants. If I reinvest in my restaurants, then not only am I maintaining the jobs that I have in 

my restaurant with the employees that I have, but also it helps to 

create or sustain other jobs. 

When we build new restaurants or remodel, I will give you two 

specific examples. The person who does the landscaping in my 

Wendy’s, for my four Wendy’s, he started just as a person cutting 

a couple of lawns. He came to me and asked for an opportunity to 

present his case to take care of that. I agreed. That person now 

hires over 35 people. He has created 35 jobs along with the sustainability of his because of that. That is a trickle-down effect of jobs. 

286 

Additionally, my window cleaner, same thing. This gentleman 

was just cleaning a couple of windows. He came in and asked me 

if he could have the opportunity to quote cleaning our windows. I 

agreed to do that. He now hires 7 to 10 people to help clean windows. So there is a trickle-down effect when I can have money to 

invest in my restaurants. 

If I build a new restaurant, I create 30 more jobs on average, I 

create four to six more management positions, and I have created 

work for construction which we all know is badly needed in this 

country. While they build the restaurant, the equipment to supply 

that restaurant, and then there is the food that has got to be there 

to supply it, and again, it is more job security for those that are 

cutting my landscaping and cleaning my windows. 

Mr. OLSON. Washing windows. Yes, I am out of time. One suggestion, sir, get the first Whataburger franchise here in the Washington, DC Area. You will be booming. That is the Texas national 

restaurant, a hamburger restaurant, Whataburger, Whataburger, 

Whataburger. 

Mr. WHITFIELD. What is the name of it? 

Mr. OLSON. Whataburger. 

Mr. WHITFIELD. Oh, Whataburger. Thank you. 

Mr. OLSON. I yield back. 

Mr. WHITFIELD. At this time I would like to recognize Mr. Matheson for 5 minutes. He has been sitting here very patiently. 

Mr. MATHESON. Thanks, Mr. Chairman. Thanks for doing these 

hearings. I am sorry my conflict prevented me from being here for 

the first two panels, and I assume we can send some written questions in for them, if we can. Appreciate your patience with that. 

Couple of questions I wanted to ask. Ms. Johnson, you mentioned a savings on fuel cost, $1.09 a gallon. I think that was a study by 

the Renewable Fuels Association that came up with that number; 

is that correct? 

Ms. JOHNSON. Yes. 

Mr. MATHESON. Are you familiar with the article in Scientific 

American this week, the study out of MIT that says that that study 

was flawed and that that number is actually not true and that 

there is no discernible effect on fuel costs from ethanol? 

Ms. JOHNSON. I am not. 

Mr. MATHESON. OK. Mr. Chairman, I wish I had a paper copy 

of that study, but if it is permissible, I think that ought to be part 

of the hearing record. This is an article in Scientific American. 

[The information appears at the conclusion of the hearing.] 

Mr. WHITFIELD. Without objection. 

Mr. MATHESON. Thank you. I think also, the issue that is interesting now compared to a couple of years ago is the impact of RINs. 

Didn’t I hear they are a buck thirty-four or something like that? 

It is a lot more. So I think the effect on fuel costs is a relevant 

topic for us to look at, and we ought to talk about things have 

changed. Whatever study said it was in 2009 or 2010 or 2011, I 

just know in 2013, the cost of RINs has gone up a lot, and it has 

got to be having an impact on price at the pump. 

Another question I wanted to ask you, Ms. Johnson. Last month, 

during the first RFS hearing, we heard testimony from government 

witnesses. We had someone from the Energy Information AdminisVerDate Nov 24 2008 12:30 Aug 05, 2014 Jkt 037690 PO 00000 Frm 00294 Fmt 6601 Sfmt 6601 F:\MY DOCS\HEARINGS 113\113-73 CHRIS
287 

tration. We had someone from the U.S. Department of Agriculture. 

They indicated that as long as ethanol continues to be economical, 

which I believe in your testimony you indicate is true, this issue 

about using it as an oxygenator, as an octane booster, that they estimate, the EIA estimates that if you get rid of the RFS altogether, 

it would result in roughly about a 10 percent reduction in the 

amount of ethanol that is used in the supply chain today. 

Do you agree with that or do you have a sense if that would be 

the case or not? 

Ms. JOHNSON. I do not agree with that statement because the oil 

industry needs an incentive to blend renewable fuels; otherwise, 

there is no incentive to blend those fuels. And you know, we have 

talked in other panels, too, about battling over different studies, so 

you know, we have got the numbers that say that consumers saved 

$1.09 a gallon at the pump and that saved families $1,200 last 

year. 

Mr. MATHESON. I hear you. You are right. In our business, we 

hear about different studies and different statistics all the time. 

Sometimes it is good to see who it is coming from if they have an 

interest in what that study says. 

Ms. JOHNSON. Congressman, if I can just say we have got a 

short-term problem. The drought did cause a lot of damage last 

year, a lot of tough issues for all of us, and so the short-term answer to a short-term problem is we are looking at producing a very 

abundant corn crop for this year, which will answer short-term 

problems. We have to start looking at what the long-term big picture is for fuels in America and what it means for the three things 

that the RFS was originally set out to do. 

Mr. MATHESON. I couldn’t agree more. 

Mr. Faber, do you have a thought about the statement from the 

Energy Information Administration that indicates that if the mandate goes away, it will result in a drop of about 10 percent on the 

overall use of ethanol in our fuel supply chain? 

Mr. FABER. I think it is incredibly important question and it goes 

back to something that Mr. Terry was alluding to as well. What 

happens if you got rid of RFS? And when you, I think some of your 

witnesses yesterday alluded to this, and EIA has confirmed it, that 

in the short run, not much. That because we have more than 14 

billion gallons of ethanol production capacity and because the gasoline refiners are now routinely blending ethanol, in part because of 

Mr. Braley’s picture, in part because in some time—at some points 

in the year it helps water the scotch (phonetic). It is a little bit 

cheaper than the RBOB in gasoline. There is plenty of incentive for 

gasoline refineries to continue to blend ethanol. To Professor Hurt’s 

point, in the absence of the floor, in the absence of mandate that 

some day there may be other ways for blenders to improve octane 

or to provide an oxygenate, and that is the trade-off. 

The benefit to consumers of phasing out the corn mandate, not 

repealing the entire mandate but phasing out the corn mandate is 

you are providing more room in that 13.4-gallon E10—13.4 billion 

gallon E10 pool for these cellulosic biofuels that have the potential 

to really reduce greenhouse emissions. 

288 

Mr. MATHESON. Well, I would concur with that. I would also say 

the other benefit would be that you would get rid of the need for 

the RINs that are, I think, increasing and distorting markets. 

Mr. FABER. Absolutely. 

Mr. MATHESON. And I think that that would be helpful. 

Mr. Chairman, I think that weraised an issue that may be interesting for this committee to look at which is, in the short run, it 

appears that ethanol is a good way to pursue oxygenating fuels or 

octane boosters. There is a concern in the longer run there may be 

alternative choices that the refining industry could use. Maybe we 

could have a hearing to talk about what the likelihood or viability 

is of those alternative choices. That might make us a little more 

informed as we look at the impacts of the renewable fuel standard. 

With that, I really appreciate your patience, and I will yield back 

my time. 

Mr. WHITFIELD. Well, thank you, Mr. Matheson, and thanks for 

that suggestion. The RINs were certainly discussed a lot yesterday, 

and the RIN prices yesterday, and I want to thank all of you for 

taking time from your busy schedules to come and join us and to 

give us your views. 

As we all know, it is a rather complex issue, and we are—we 

have had a lot of hearings, and we have read a lot of responses to 

the White Paper invitations, and it is an important issue, so we are 

going to proceed cautiously. I think most people agree that there 

are some inequities that need to be addressed, and I don’t know 

precisely where we are going to end up, but that is what the political process is all about. 

And so with that, I would thank you-all again and that—I would 

ask unanimous consent to enter into the record letters from various 

groups, including the American Motorcyclist Association, the American—the Oregon Dairy Association, the Oregon Cattleman’s Association, the Oregon Petroleum Association and the American Cleaning Institute. So, if you would enter that into the record. 

[The information appears at the conclusion of the hearing.] 

Mr. BRALEY. Mr. Chairman. 

Mr. WHITFIELD. Yes. 

Mr. BRALEY. Would you also allow unanimous consent request to 

enter a similar statement from the Iowa’s Cattleman’s Association? 

Mr. WHITFIELD. Absolutely. 

Mr. BRALEY. In support of maintaining the RFS. 

Mr. WHITFIELD. Absolutely. Absolutely. Without objection, so entered. 

[The information appears at the conclusion of the hearing.] 

Mr. WHITFIELD. Hey, I had heard about the Iowa Cattleman’s Association. So that concludes today’s hearing. The record will remain 

open for 10 days, and thank you-all once again. 

[Whereupon, at 4:10 p.m., the subcommittee was adjourned.] 

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