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96–193 PDF 2015

S. Hrg. 114–71 

RE–EXAMINING EPA’S MANAGEMENT OF THE 

RENEWABLE FUEL STANDARD PROGRAM 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

REGULATORY AFFAIRS AND FEDERAL 

MANAGEMENT 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JUNE 18, 2015 

Available via http://www.fdsys.gov 

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin, Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

KEITH B. ASHDOWN, Staff Director 

GABRIELLE A. BATKIN, Minority Staff Director 

JOHN P. KILVINGTON, Minority Deputy Staff Director 

LAURA W. KILBRIDE, Chief Clerk 

LAUREN CORCORAN, Hearing Clerk 

SUBCOMMITTEE ON REGULATORY AFFAIRS AND FEDERAL 

MANAGEMENT 

JAMES LANKFORD, Oklahoma, Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

MICHAEL B. ENZI, Wyoming 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

HEIDI HEITKAMP, North Dakota 

JON TESTER, Montana 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

JOHN CUADERESS, Staff Director 

ERIC BURSCH, Minority Staff Director 

RACHEL NITSCHE, Chief Clerk 
(III) 

C O N T E N T S 

Opening statement: Page 

Senator Lankford .............................................................................................. 1 

Senator Heitkamp ............................................................................................ 2 

Senator Ernst .................................................................................................... 6 

Senator Sasse .................................................................................................... 9 

Senator Peters .................................................................................................. 11 

Prepared statement: 

Senator Baldwin ............................................................................................... 35 

WITNESSES 

THURSDAY, JUNE 18, 2015 

Janet McCabe, Acting Assistant Administrator, Office of Air and Radiation, 

U.S. Environmental Protection Agency 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 36 

APPENDIX 

Statements submitted for the Record from: 

Biotechnology Industry Organization ............................................................. 42 

Growth Energy ................................................................................................. 45 

Wisconsin Corn Growers Association .............................................................. 48 

Responses to post-hearing questions for the Record from Ms. McCabe .............. 50 

(1) 

RE–EXAMINING EPA’S MANAGEMENT OF THE 

RENEWABLE FUEL STANDARD PROGRAM 

THURSDAY, JUNE 18, 2015 

U.S. SENATE,

SUBCOMMITTEE ON REGULATORY,

AFFAIRS AND FEDERAL MANAGEMENT,

OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 9:01 a.m., in room 

SD–342, Dirksen Senate Office Building, Hon. James Lankford, 

Chairman of the Subcommittee, presiding. 

Present: Senators Lankford, Ernst, Sasse, Heitkamp, and Peters. 

OPENING STATEMENT OF SENATOR LANKFORD 

Senator LANKFORD. Good morning, everyone. I want to welcome 

everyone to today’s Subcommittee hearing on the Renewable Fuel 

Standard (RFS). 

I was privileged in the U.S. House to chair two prior hearings 

on this topic. I look forward to another important discussion regarding the Renewable Fuel Standard and its management. 

The ideals of the RFS are laudable: to improve our Nation’s energy security and preserve the environment. Since 2005, daily domestic oil production has nearly doubled. Meanwhile, other government regulations, such as Fuel Economy Standards, combined with 

the economic recession, have led to lower demand than anticipated. 

Additionally, the increased use of natural gas and improved energy 

efficiency have lowered our greenhouse gas emissions. 

For many years, the RFS has chased the annual mandates. 

Statutorily, the U.S. Environmental Protection Agency (EPA) is required to release the mandated volumes by November 30 of the 

preceding year to allow those covered by the mandate to plan for 

the future. The EPA has not met this deadline since 2009 and we 

are still awaiting the EPA for the final version of the 2014 volumes, even though the year in question has been over for 6 

months. 

An announcement was made in November of last year that we 

would not see a final rule until the calendar year was over. The 

agency cited significant comment and controversy as the reason 

they could not finalize volumes, seemingly an admission that this 

program is unworkable in its current form. There is a tremendous 

amount of controversy around the RFS; there are a lot of opinions 

circling and a lot of emotions around this particular issue. 
2 

In accordance with a court order, on June 1, 2015, the proposed 

mandates for 2014, 2015, and 2016 were all released together. Although some might say better late than never, we need to take a 

serious look at why these delays are unavoidable every year now 

under current law. 

As for the actual numbers, the EPA has proposed 2014, 2015, 

and 2016 requirements, including increased, unattainable at times, 

levels of renewables in those quotas for the gasoline supply over 

the next year and a half. The EPA has chosen to wisely work from 

the actual used volumes for 2014, but the future mandates called 

for by the proposed rule represent an aspirational goal of breaching 

the blend wall with very little time for increased consumer use of 

vehicles equipped to handle higher ethanol fuels. 

The likelihood that the volumes for cellulosic and advanced fuel 

required under the RFS will have to be reset by the EPA starting 

next year increases the regulatory uncertainty. This authority will 

likely be triggered due to the agency waiving significant percentages of the volume mandated by the law in face of production not 

being nearly as high as imagined by Congress in 2007, when the 

RFS was last modified. Let me reassert again, Congress is the one 

who set the rule in 2007, but the EPA is the one who has to figure 

out how to manage this, since the cellulosic production is not close 

to what was predicted in statute. 

After a decade of implementation, we must ask ourselves if the 

RFS goals of yesterday are worth the increased cost to our food, 

gas, and the environment. From the price of livestock feed, to the 

additional cost to restaurant owners, to the everyday Americans 

who live with more expensive grocery bills, the program has had 

a negative impact in many areas. 

Beyond real concerns over engine damage, there have also been 

additional costs to motorists at the pump. On the environmental 

front, new studies are highlighting the program’s negative impact 

on our land, water, and air, specifically ozone. 

Today, we have the opportunity to review the EPA’s management 

of the program and take stock of the current state of the RFS. I 

anticipate an insightful hearing and am pleased that our witness, 

Janet McCabe, could join us. Thank you for being here again. I look 

forward to re-examining these issues with my colleagues and our 

witness today. 

With that, I recognize the Ranking Member, Senator Heitkamp, 

for her opening statement. 

OPENING STATEMENT OF SENATOR HEITKAMP 

Senator HEITKAMP. Thank you, Mr. Chairman. 

I want to start by first saying I wish we were not having this 

hearing today. I wish there was no question over the management 

of the RFS or the Environmental Protection Agency’s ability to implement the RFS as Congress intended. But, unfortunately, we are 

in a place where EPA has created, I think in some ways unknowingly, uncertainty to our biofuels producers, from corn ethanol, to 

biodiesel, to cellulosic ethanol producers. And, this uncertainty and 

lack of predictability is costing us investments. It is costing us environmentally and it is costing us jobs. 
3 

I am a strong supporter of truly ‘‘all of the above’’ energy policy 

security. Along with Senator Lankford, my State is one of the leading producers. I do not know where Oklahoma is on that rank, but 

North Dakota is No. 2 in the production of oil, and we have a lot 

of associated gas. We have a lot of wind resource. And, we certainly 

have a lot of bio-resource. And, so, this is a huge issue to my State. 

And I can tell you that I think the RFS is part of that ‘‘all of the 

above’’ policy. 

When we look at what RFS means to my State of North Dakota alone, the industry represents $2.5 billion in annual economic output, almost 9,000 jobs. In Oklahoma, the RFS helped create about 

4,300 jobs. In Wisconsin, $4.2 million in economic output with over 

19,000 jobs. And in Iowa, obviously a major ethanol and biofuels 

producer, $19.3 billion with almost 74,000 jobs in the mix. And, I 

think I could go on. 

I think these numbers are important to highlight because the 

RFS is critical to our economy, and that is why it is so important 

that it be administered correctly, as Congress intended. 

I am glad the EPA finally released the new proposed rules for 

2014, obviously late. I do not think anyone can say releasing those 

numbers in 2015, where there is not finality to the rule and will 

not be until the end of 2015—2014 rules were not timely. I do not 

think there is any doubt about it, and that has created a great 

amount of disruption. But, I do want to take time and praise this 

important first step and I want to thank Ms. McCabe for her leadership in making that happen. 

Unfortunately, the proposal continues to ignore congressional intent and reduces congressionally mandated blended volumes, citing 

availability of distribution capacity. The statute only allows for an 

inadequate supply waiver for domestic biofuels supply and not a 

distribution capacity waiver. In fact, in 2005, the House included 

a waiver provision for distribution capacity, but the final bill was 

passed by the House and the Senate did not. 

So, I hope when the EPA puts out its final rule this November, 

they will toss out this flawed and disallowed reasoning and return 

the management of the program to the way Congress actually intended. If they do that, the program will work just fine, as it did 

in the first years of the RFS. 

I think certainty needs to be our top concern when it comes to 

Federal regulation, legislation, or anything else that we do here in 

Washington, and certainly on this Committee, we spend a lot of 

time talking about predictability and certainty as essential components to a proper business environment. 

Providing that certainty for our producers and businesses is absolutely critical so that they can plan long-term and grow their 

business. And, Congress provided that certainty, I believe, in 2005 

and 2007 when it passed and amended the RFS by setting very 

clear volumes and guidance on when those volumes may be waived. 

The best way to get back on track and provide certainty, I think, 

is to follow these very clear congressional mandates. 

Because this uncertainty has real consequences, I mentioned earlier the contribution RFS has made to our States. When managed 

out of line with congressional intent, you can imagine there are 

negative consequences. In fact, the advanced and cellulosic biofuels 
4 

sectors have already lost $13.7 billion in investments due to EPA’s 

delay. For biofuels, 54 plants in 30 States have closed or idled because of the lack of certainty from EPA. In 2014, nearly 80 percent 

of U.S. biofuel producers scaled back production, and almost 6 in 

10 idled production altogether. I know this as a certainty because 

our Velva, North Dakota biodiesel plant stalled production in biodiesel for the first part of 2015. 

However, I must emphasize again that this is not a problem with 

the RFS, but, rather, a problem with the administration of the 

RFS. As one testimony for the record noted, EPA’s failure to issue 

RFS rules in a timely manner that is consistent with the law 

should not be misconstrued as a sign that the program is broken. 

Up until 2013, the program worked as intended, to spur innovation 

and growth in the advanced and cellulosic biofuels space. 

So, I look forward to hearing from Ms. McCabe on EPA’s past 

successes of administration of the program and how they can get 

back to those past successes. And, I would say, I am particularly 

interested in the process and how that process can be amended. 

This is not a hearing to talk about whether we should repeal or in 

any way adjust the RFS, but what we can do to make this program 

administered in a way that provides certainty. 

So, thank you, Ms. McCabe, for showing up, and thank you, Mr. 

Chairman, for the opportunity to offer a statement. 

Senator LANKFORD. That is great. 

At this time, we will proceed with testimony from our witness. 

Janet McCabe is the EPA’s Acting Assistant Administrator at the 

Office of Air and Radiation. She previously served as the Office of 

Air and Radiation’s Principal Deputy to the Assistant Administrator. 

I would like to thank Ms. McCabe for appearing before us today. 

It is good to be able to see you again. 

In the tradition of this Subcommittee, we swear in all witnesses 

that appear before us. If you do not mind, I would like to ask you 

to stand and raise your right hand. 

Do you swear the testimony that you are about to give before the 

Subcommittee will be the truth, the whole truth, and nothing but 

the truth, so help you, God? 

Ms. MCCABE. I do. 

Senator LANKFORD. Thank you. You may be seated. Let the 

record reflect that the witness answered in the affirmative. 

We will be using a timing system today, but you are the only witness in our conversation. We would like you to stay as close as you 

can to the 5-minute time period. We have obviously received your 

excellent statement for the record. You are welcome to build on 

that or to be able to reinforce that or to be able to talk about a 

totally different thing, if you would like to, as well, and then we 

will have some question time. 

As we have done in the past in this Subcommittee, and you and 

I have done before in the House, the first round will be set questions at 5 minutes each. After that, it will be open dialogue here 

among the dais. We will have both interchange here on the dais as 

well as with you, and it will be a more open conversation. 

So, I would be glad to be able to receive your testimony now. 
5 

1The prepared statement of Ms. McCabe appears in the Appendix on page 36. 

TESTIMONY OF JANET MCCABE,1 ACTING ASSISTANT ADMINISTRATOR, OFFICE OF AIR AND RADIATION, U.S. ENVIRONMENTAL PROTECTION AGENCY 

Ms. MCCABE. Thank you, Chairman Lankford, Ranking Member 

Heitkamp, and other Members of the Subcommittee. Good morning. I appreciate the opportunity to testify on the Renewable Fuel 

Standard program and EPA’s recent volumes proposal. 

The Clean Air Act requires EPA to publish annual standards for 

four different categories of renewable fuels: Total, advanced, biomass-based diesel, and cellulosic. These standards apply to producers and importers of gasoline and diesel fuel. 

On May 29, EPA issued a proposal that would establish the 

standards that apply for years 2014 through 2016 and the volume 

of biomass-based diesel for 2017. We will finalize these standards 

by November 30, at which point we will have returned to the statutory time line for issuing the Renewable Fuel Standards. 

EPA recognizes that the delay in issuing the standards for 2014 

and 2015 has led to uncertainty in the marketplace. This proposal 

establishes a path for ambitious, responsible growth in biofuels and 

helps provide the certainty that the marketplace needs to allow 

these low-carbon fuels to further develop. 

Congress set annual standards for biofuel use that increase every 

year. It also included in the law tools known as the waiver provisions for EPA to use in the event that it determined the statutorily 

prescribed volumes could not be met. Our recently issued proposal 

seeks to ensure that the growth of renewable fuel production and 

use continues consistent with congressional intent. It uses our 

waiver authority in a judicious manner to establish ambitious, but 

responsible and achievable standards. 

The proposal addresses 3 years’ worth of standards and would 

set the volume requirement for biomass-based diesel for a fourth 

year. For 2014, we are proposing standards at levels that reflect 

the actual amount of biofuel used domestically in 2014. For 2015 

and 2016, and for 2017 for biomass-based diesel, the proposed 

standards would provide for steady increase over time. 

The proposed volumes reflect our consideration of two essential 

factors: First, that the market can respond to ambitious volume 

targets; and second, that there are limits today to the amount of 

volumes that can be supplied to consumers. 

The steadily increasing volumes that we have proposed mean 

that biofuels will remain an important part of the overall strategy 

to enhance energy security and address climate change. We are optimistic about the future of biofuels and think our proposal will put 

us on a pathway for steady growth in the years to come, as Congress intended. 

Many stakeholders rightly want to know why the volume targets 

established in the statute cannot be reached. There are several reasons: Slower than expected development of the cellulosic biofuel industry and the resulting shortfall in cellulosic biofuel supply; a decline in gasoline consumption rather than the growth projected in 

2007; and constraints in supplying certain biofuels to consumers, 

ethanol at greater than 10 percent of gasoline, in particular. Our 
6 

proposal includes a discussion of this last constraint, known as the 

E10 blend wall. 

If gasoline demand continues, on average, to trend downward or 

remain flat, increasing the amount of ethanol used in the fuel pool 

will require significantly greater use of gasoline blends with higher 

ethanol content. EPA has taken steps to pave the way for increased 

use of higher level ethanol blends, including granting partial waivers for the use of E15 in certain light-duty cars and trucks beginning with model year 2001. At the same time, EPA recognizes that 

there are real limitations in the market to increase use of these 

fuels, including current near-term limits on fueling infrastructure. 

Our proposal aims to balance two dynamics, Congress’ clear intent to increase use of renewable fuels over time to address climate 

change and increase energy security, and real world circumstances, 

such as the E10 blend wall, that have slowed progress toward such 

goals. Thus, we are proposing standards that will still drive growth 

in renewable fuels at an ambitious, but responsible, rate. 

For 2016, we are proposing numbers to incentivize real growth. 

For example, we propose to set total renewable fuel volumes about 

9 percent higher, advanced biofuel about 27 percent higher, and 

biodiesel standards in 2017 about 17 percent higher than the actual 2014 volumes. We believe that these proposed volumes are 

achievable and consistent with Congress’ clear intent to drive renewable fuel use up, even as we use the authorities that Congress 

provided EPA to manage the program responsibly. 

EPA has taken other steps to improve the administration of the 

RFS program. We have improved the quality, transparency, and efficiency of our petition review process for new biofuel pathways 

that can count under the RFS program. And it is important to remember that the RFS program is only one part of the overall picture for biofuels. Both the U.S. Department of Agriculture (USDA) 

and the Department of Energy (DOE) have programs looking at 

ways to support biofuels and biofuel infrastructure, and we work 

closely with them as we implement this statute. 

We will be holding a public hearing on June 25 in Kansas City, 

Kansas, and we look forward to hearing from all stakeholders during the public comment period, which ends on July 27. And, as I 

said, we intend to finalize the rule by November 30 of this year. 

Again, I thank you for the opportunity to serve as a witness at 

this hearing and I look forward to your questions and to the discussion. 

Senator LANKFORD. Thank you. 

The Ranking Member and I, we are going to defer our questions 

to the end of this round, which means I would recognize Senator 

Ernst for the first questions. 

OPENING STATEMENT OF SENATOR ERNST 

Senator ERNST. Thank you, Mr. Chairman, thank you, Ranking 

Member Heitkamp, for this wonderful discussion that we will be 

having this morning. I appreciate the opportunity. And, thank you, 

Ms. McCabe, for joining us today. 

I would like to start off by saying thanks so much. We do know 

that you are working very hard in this area, so I appreciate that. 

I appreciate your testimony, and I believe personally that this is 
7 

not only an economic issue, but, of course, a national security issue, 

as well. 

This Committee does have a history of working together across 

the aisle on security and good governance matters and I look forward to working with my colleagues on this important topic. 

Clean and renewable energy is a topic that everyone in the 

United States can get behind, and over the years, the RFS has 

proved successful at driving innovation and effective options for 

consumers at the pump. And, as many of you may know, Iowa 

leads the Nation in biofuels creation, producing 3.8 billion gallons 

of clean burning ethanol and 230 million gallons of biodiesel, and 

that is from our 2013 numbers. We are also home to two state-ofthe-art cellulosic ethanol facilities with another coming into production later this year. Additionally, we boast retailers across the 

State that offer affordable ethanol and biodiesel blends to consumers. 

When passed by Congress, the original intent of the RFS was to 

create consumer choice for clean fuel by spurring investment in research, production, and infrastructure. Unfortunately, the EPA is 

now using the lack of infrastructure as an excuse for setting 

biofuels levels lower than originally mandated, which flies in the 

face of the law. 

This issue is of critical importance to the State of Iowa as well 

as the Nation. Ensuring our domestic energy security and promoting innovation in the next generation of biofuels is crucial as 

we move forward. 

As you may know, Ms. McCabe, in February, I invited EPA Administrator Gina McCarthy to visit Iowa and to see the impact of 

the delayed release of the RFS volumes. Additionally, last week, 

the entire Iowa delegation—Republican, Democrat, the entire delegation—sent another letter to the Administrator, urging her to hold 

a hearing on the RFS levels in our State. Can we expect either of 

these to happen? 

Ms. MCCABE. Thank you, Senator. I cannot speak for the Administrator’s schedule, but I can certainly take back to her that you 

raised this this morning and her office can respond. 

Senator ERNST. Thank you. 

Ms. MCCABE. Yes. In terms of the hearing, as I mentioned, we 

are holding a public hearing in Kansas City, Kansas. We have a 

regional office there. There is great interest in this issue across the 

country and it is always a challenge for us to choose the location 

of the limited number of hearings that we are able to have. And, 

in this case, we felt that having a hearing in Kansas City was well 

located for many States that are very interested in this issue and 

we have the support of our local office there. As of yesterday, I 

think we had about 250 people signed up, including a number of 

people from Iowa. So, we will look forward to a very good and robust attendance there. 

Senator ERNST. Thank you. And, if you would, just please emphasize to her that that is an open invitation, because we do want 

to see the EPA Administrator in Iowa to just experience some of 

the difficulties we have had with the lack of action on part of the 

EPA. 
8 

If we can move on to infrastructure and congressional intent, in 

your testimony, you cite lack of available refueling infrastructure 

as justification for not setting the Renewable Volume Obligations 

(RVOs) higher. However, when Congress passed the RFS in 2005, 

only two types of waiver authorities were included, and that was 

lack of supply and severe economic harm. That Conference Committee rejected available refueling infrastructure, which would 

have severely limited consumer choice and the ability to get more 

of those biofuels into the marketplace. 

Despite the clear direction from Congress, EPA has now decided 

to use available refueling infrastructure as a condition to waive the 

standard, even though Congress expressly rejected that when they 

set the law. Can you explain why the EPA is blatantly overlooking 

the law? 

Ms. MCCABE. Sure. I would be happy to discuss this. And, of 

course, this is an issue on which there are many views, as well, 

and happy to explain ours. 

The language in the statute, as you observe, gives two reasons 

for EPA to waive the standards, and the one that we are looking 

at here is the one that says inadequate domestic supply. And, I understand that there was activity in finalizing those words, but, in 

fact, those words are very simple in the statute and do not explicitly say exactly what that means. And, as is often the case, it is 

EPA’s job to reasonably interpret congressional language in implementing the statute. 

We lay this out at some length in our proposal, and I would be 

happy to share that with you if you have not seen it, but the bottom line, Senator, is that our interpretation of that term is that 

Congress intended for these fuels not only to be produced, but to 

be used. That is where the value in greenhouse gas reduction and 

diverse energy supply and, as you say, consumer choice comes. 

And, so, when you have a situation where the fuels cannot, in fact, 

be delivered to consumers on the timeframe that was set out in the 

statute and Congress provided this waiver authority, we believe it 

is a reasonable interpretation for us to reduce the volumes to a 

level that still will comply with Congress’ intent to drive the fuels. 

This was a big thing that Congress did in the RFS. It was calling 

for big and significant change. And, the program stretches out over 

a number of years, and in order to change a system in this dramatic a way, it is taking time. And, we believe that looking over 

the history of this program in the last few years and what we can 

project forward, to set the standards at the statutory volumes 

would simply not be appropriate. There is too far a way to go. And, 

so, the waiver provision is there for EPA to use in its considered 

judgment to set ambitious, but responsible, levels. 

Senator ERNST. I thank you. I know my time has expired. I 

would argue that we are caught in a very vicious cycle with the 

producers not knowing what that volume will be, so we have actually delayed production and research and the furthering of those 

types of fuels. So, without the standards being set, we do not know 

where to go. So, I just continue to state, we need reliable energy 

sources for all of our consumers. We would like them to make that 

choice. 

But, thank you very much, Mr. Chairman. 
9 

Senator LANKFORD. Thank you. Senator Sasse. 

OPENING STATEMENT OF SENATOR SASSE 

Senator SASSE. Thank you, Mr. Chairman. 

Ms. McCabe, thank you for being here. I actually have a series 

of questions that will followup on Senator Ernst’s questions, as 

well, because it feels to me like what you hear from the EPA about 

corn production volumes and the Department of Agriculture are 

quite different, and there is a lot of discussion in your Quadrennial 

Review about coordination. So, I will come back to some of that in 

a minute, but I just want to associate myself with Senator Ernst’s 

questions, as well. 

As the EPA considered the proposed rule for the RVO standards, 

did you use any studies or metrics to model how the proposed rule 

would affect transportation fuel prices? 

Ms. MCCABE. The way that the rule, or the program, affects 

transportation prices is very complicated and we did not attempt 

to estimate the impacts on transportation fuel prices. 

Senator SASSE. OK. So, no studies or models on transportation 

fuel prices that you have used? 

Ms. MCCABE. We certainly look at all of those, but we ourselves 

did not try to estimate what the impacts would be. 

Senator SASSE. So, would it be possible for us to get a list of the 

studies and the models that you consulted? 

Ms. MCCABE. Sure. 

Senator SASSE. OK, great. We will follow-up. Thank you. 

And, in your proposed rule, did you conduct any studies to model 

how the proposed rule would affect international trade, and in particular, I wonder if you evaluated changes in trade flows in biofuels 

between the United States and Brazil. 

Ms. MCCABE. We did not do any of that work ourselves. Again, 

those are issues that many people look into, and we certainly pay 

attention to work that others do, but we did not do that ourselves. 

Senator SASSE. So, when you are evaluating the proposed rule, 

when you are deciding what you are going to promulgate, are those 

studies and what you consulted that we could have access to—— 

Ms. MCCABE. Sure. 

Senator SASSE [continuing]. We could have a sense of what you 

consulted? 

Ms. MCCABE. Sure. Anything that we looked at, you certainly 

can—— 

Senator SASSE. Great. 

Ms. MCCABE [continuing]. Look at yourself. 

Senator SASSE. OK. Thank you. 

In your testimony, and this is, again, picking up on some of what 

Senator Ernst was arguing—— 

You say that the EPA will continue to engage stakeholders and 

be working in consultation with USDA and the DOE. 

Ms. MCCABE. Yes. 

Senator SASSE. In April, the Department of Energy released its 

Quadrennial Review and it stressed that DOE and the Department 

of Defense (DOD) would be continuing research and demonstration 

activities to develop drop-in biofuels, particularly for use in aviation and large vehicles. 
10 

In addition, the report states that the Department of Energy 

would be providing technical support to the States, communities, 

and private entities wishing to invest in infrastructure to dispense 

higher-level ethanol blends. The USDA, for its part, has crop projection reports on corn that state that the amount of corn used in 

calendar year 2014 is estimated to be 14.2 billion bushels, up well 

from the 2013 estimate, and average yields for the United States 

are estimated to be at a record high 171 bushels an acre. I think 

what this means is that the USDA is saying that there is plenty 

of corn and the Department of Energy is saying that we need more 

infrastructure and more research. 

I think when you listen to corn growers in my State, they are 

skeptical about your promises of the close consultation across the 

Department and also with different geographies, and they actually 

just wonder if you all are skeptical of corn. And, so, I wonder if you 

see their skepticism and if you can explain to them how it is believable that you are actually listening to these other agencies. 

Ms. MCCABE. Well, indeed, we do. I can assure you that we work 

closely with the USDA and DOE. I, myself, have been involved in 

many conversations with staff and leaders from those agencies as 

we worked on this and other issues, and there is very much a commitment across the Administration to work to implement the RFS 

and promote the development and use of renewable fuels. So, it is 

hard to convince people who might have a different view, but I 

think that our proposal reflects the fact that we consult with those 

agencies. And, we are not agricultural economists. We do not try 

to be. That is their job to do. So, we certainly must work with 

them, and we do. 

Senator SASSE. It just feels to a lot of people who are trying to 

make production decisions that it is hard to reconcile the different 

agencies’ views of the future of the corn crop. 

I am a cosponsor of S. 1239, which is a bill introduced by Senators Donnelly, Grassley, and Fischer that expands waivers of the 

vapor pressure limitations that otherwise make it harder for E15 

to be used in the summer driving season. I have some questions 

for you related to the problem that that tries to solve. Some of 

these may end up being technical enough that we will need to do 

it for the record. 

But, the State of Nebraska is able to provide us with a breakdown of the number of registered vehicles by fuel source, including 

automobiles that are capable of using flex fuel and E10 in our 

State of Nebraska. In light of your concerns over the refueling and 

vehicle infrastructure issues in the United States, would you be 

able to provide an EPA estimate of how many vehicles in the total 

U.S. fleet are capable of supporting fuel above E15, and in particular, how many can use flex fuel, and would you be able to 

elaborate more on the breakdown by fleet in the amount of vehicles 

that could support each category of fuel. 

Ms. MCCABE. We do have numbers to answer those questions. I 

do not have them with me, but we would be glad to provide them. 

Senator SASSE. Great. We will followup today with a letter. 

Ms. MCCABE. OK. 

Senator SASSE. Thank you. 

Ms. MCCABE. Great. 
11 

Senator LANKFORD. Senator Peters. 

OPENING STATEMENT OF SENATOR PETERS 

Senator PETERS. Thank you, Mr. Chairman. 

Thank you, Ms. McCabe, for EPA’s hard work and for your work 

in administering the RFS program, and I look forward to working 

with you in the months and years ahead as we continue to work 

on this. 

As a Senator from Michigan, I am always looking for ways to diversify the U.S. vehicle fuel supply and making our Nation more 

energy independent and improving our environment. And, the RFS, 

I believe, has been a proven program that is driving forward alternative fuels and economic development. It is creating new clean energy jobs. And, it is also, at the same time, strengthening our agricultural markets. 

And, while I appreciate the effort of the EPA to set ambitious domestic biofuel targets while also trying to balance achievable 

standards, I believe these targets that you have do not really reflect Congress’ intended goals for the RFS. 

When Congress passed the RFS, the intent was to set ambitious 

and aggressive targets to spur innovation in biofuels production 

technology and invest in infrastructure to bring these biofuels to 

market. And, in order to accomplish these goals, I believe we have 

to stay the course and we have to keep the RFS intact. 

EPA’s latest proposal is an improvement, certainly, over the 2013 

proposal, but the proposed volume requirements for the next few 

years, I believe, do have consequences for our economy, for our energy security, and for the environment. In addition, EPA’s delays 

in rulemaking over the past 2 years have chilled necessary investment in advanced and cellulosic biofuels just as they have reached 

commercial development. 

The latest proposal cites lack of supply as a reason to reduce volumes. It was not the congressional intent to allow the EPA to cite 

the availability of supply for blending and distribution as a condition to its waiver authority. I joined a letter that was signed by 37 

Senators stating the condition being cited falls outside of what we 

think is clearly defined waiver authority. 

In relation to the infrastructure investment, I believe it is clear 

that the proposal will depress renewable fuel credit prices and will 

eliminate incentives that exist today for infrastructure investment, 

and this is troubling, given the fact that before the rule, infrastructure investment was rising very rapidly and now it has stalled as 

a result of some of these delays. 

What is your plan to get infrastructure investments made if this 

proposed rule is finalized without any changes? 

Ms. MCCABE. Well, we think that there are a number of things 

that will happen. As you, yourself, have cited, and many others 

have, too, the certainty of having the volumes out there is absolutely critical for people to know what is coming, and I think that 

this proposal signals an intent of the Administration and the EPA 

to steadily grow volumes over time, and that certainty is very important. 

The USDA, which was mentioned a minute ago, is very committed to looking to enhance and improve infrastructure. It re-
12 

cently announced a program to help do that with grant funds to 

help build infrastructure. And, we think that the combination of 

those efforts, things that we are doing in order to streamline the 

pathway approval process so that we can get these new and innovative pathways approved and into the market, will also help, and 

that as you put those things together, certainty from the regulatory 

side, some support from USDA and others across the Administration, and people realizing that more fuel, more choice will attract 

consumers to want these fuels, those things will help us move in 

the right direction and continue to make real progress. 

Senator PETERS. So, as you mentioned, why the importance of 

certainty and before we had certainty, the impact it has, I think 

the Biotechnology Industry Organization revealed that recent research has found that $13.7 billion in investment in advance 

biofuels was lost just during the one-year since the proposal. Does 

that sound accurate to you, and is that not a big concern? 

Ms. MCCABE. I really could not speak to that number, Senator, 

but we absolutely are concerned about what the lack of certainty 

has created. That is why we are getting this program back on 

schedule. 

Senator PETERS. Well, do you see the amount of renewable fuels 

blended into fuel supply increasing in future years beyond 2016, 

and if so, how do you see that playing out past 2016? 

Ms. MCCABE. Oh, I do see it continuing to grow. I think, as Senator Ernst acknowledged, before the RFS, there was very little of 

this fuel in the market. There is now much more than there was, 

and we see growth and we see pathways coming in. I have many 

conversations with stakeholders from across the biofuels industry 

who are very optimistic about their ability to supply fuel to the 

marketplace. And, as I noted before, this law is calling for something of a significant transformation in the way transportation fuel 

is provided, and these volumes, we believe, will continue to encourage and promote and drive those changes. 

Senator PETERS. Were greenhouse gas emissions considered as 

the agency prepared your rule in 2014, and if so, what were the 

results? 

Ms. MCCABE. Well, greenhouse gas emissions are fundamental to 

the purpose of the RFS. When we set up the program in our 2010 

rule, we did an evaluation of greenhouse gases. For the annual fuel 

volumes, we do not do an independent re-look at greenhouse gas 

emissions. 

Senator PETERS. OK. Well, I look forward to continuing to work 

with you. This is a critical industry, industry in my State as well 

as the other States here, and it is a critical part of energy independence for our country, and with agriculture, in particular, and 

we have a special connection given the fact that I represent Michigan, which is the center—we like to believe is the center of the 

auto industry, as well. So, I look forward to working with you. 

Ms. MCCABE. Thank you. 

Senator LANKFORD. Ms. McCabe, I really appreciate you being 

here and this ongoing conversation. Let me walk through some history we walked through together because, again, we are looking at 

how we are going to resolve this in the future. 
13 

In 2010, the final rule for the RFS was 4 months late. In 2011, 

it was a good year. It was only 2 weeks late. In 2012, one and a 

half months late. In 2013, 9 months late. In 2014, 18 months late 

and counting. In 2015, 6 months late and counting. 

The challenge is, once we get into 2016, 2017, 2018, and keep 

going, how does this get better and how does RFS get back on 

schedule to be ready by November, or has Congress put a requirement on EPA that it cannot fulfill? Is there something systemically 

in the structure that year after year they cannot meet this requirement? 

Ms. MCCABE. Senator, I think that is a very fair question, and 

EPA does not like missing deadlines, either. I think that a couple 

of things have happened, as we talked about last time when I visited with you, that made 2014 particularly challenging and led to 

these significant delays. And, I am an optimistic person. My job is 

to implement this program and meet our statutory obligations in 

terms of timeframe, so I am confident that we will do that, and I 

am confident for a couple of reasons. 

One is through this rulemaking this year, we will get ourselves 

back on track. We have—2014 was something of—was a significant 

year because of the impacts of the ethanol—the E10 blend wall, 

which was a significant issue that people engaged in very robustly. 

And, that time was going to come at some point in the implementation of the RFS, and last year was the year that it came. 

We learned a lot from that process and from all the conversations 

that we had with people, and our proposal, our current proposal, 

reflects a very different approach to implementing the required volumes in the statute, evaluating those in light of the fact that we 

are now at and beyond the E10 blend wall. 

And, the approach that we have taken now, which, as it lays out 

3 years, can show the EPA’s thinking over that 3-year period of 

time, is reflective of the fact that we have not finalized the rule 

and we want to make sure we understand everybody’s views on it, 

but if we were to continue with that sort of approach, we would 

have an approach that we firmly believe would enable us to issue 

the annual volume standards in a timely way. 

Our staff of technical folks working on the RFS program are 

working on it all the time, so it is not that we—— 

Senator LANKFORD. No, I do not think there is anyone that believes that you are not working on it. 

Ms. MCCABE. Yes. 

Senator LANKFORD. It is just a matter of the method and the timing of it. 

Ms. MCCABE. Yes. 

Senator LANKFORD. The concern is the—let us say 2014, 2015, 

2016 are all finalized November 30, so we have that out. Then, 

come November 2016, now we are in reset time. Cellulosic—I 

would assume you would agree, there is no chance we are going to 

hit the targets for 2017 based in statute, what is required. So, that 

will require a reset. We are not going to be 50 percent unless there 

is a tremendous amount of cellulosic that comes on board. 

With the assumption, as well, the way the statute is written, 

corn-based ethanol continues to decrease, as required in statute, 

and cellulosic continues to increase, required by statute. I mean, if 
14 

there is a clear aspect of the law, that is clear in the law. That is 

also not possible based on production. 

So, you are in a very odd quandary come November 2016, trying 

to promulgate 2017. So, I guess where I am coming at is, great, it 

looks like we are going to announce 2016 on time. Twenty-seventeen is coming. How do we avoid that? 

Ms. MCCABE. So, a couple things in response to that. You mentioned the reset requirements—— 

Senator LANKFORD. Right. 

Ms. MCCABE [continuing]. And the statute does lay out circumstances under which we consider a reset, which is a significant 

undertaking—— 

Senator LANKFORD. Right. 

Ms. MCCABE [continuing]. Because it is for multiple years into 

the future. 

Senator LANKFORD. But, would you agree on the cellulosic, we 

are going to decrease that number by at least 50 percent—— 

Ms. MCCABE. Yes. 

Senator LANKFORD [continuing]. Setting that. 

Ms. MCCABE. Yes. I would agree. 

Senator LANKFORD. OK. 

Ms. MCCABE. And, depending on how these volumes turn out, we 

may hit the reset trigger for the other volumes, as well. We actually think that it makes a lot of sense to focus a reset on all volumes at one time. It just will provide a lot more certainty to everybody to do that. 

We also recognize that we have an ongoing obligation to set the 

annual volumes. So, we will be looking to plan our work so that 

we can accommodate setting annual volumes while also proceeding 

to consider resetting if we trigger the reset for the volumes. 

Senator LANKFORD. So, let us talk about how you get comment 

and conversation going on a reset because setting the proposed volumes, that is one methodology that there is some conversation on 

right now, and then you will finalize that rule by November 30 of 

this year. Then, we have to do both the reset and volumes next 

year. Will that be two different processes? Will there be a comment 

period based on the reset and a comment period based on the annual? Will they be combined? Because I would assume you are creating a method, basically, on how to do reset in case that has to 

be done again in 2018 or 2019, to try to evaluate it from there. So, 

two different processes or one process? 

Ms. MCCABE. I think it is likely that a reset process would take 

longer than the one-year required for the annual volumes. So, 

while this is not firmly decided, my expectation is that it would 

likely be two processes, and each would have comment opportunities and multiple opportunities for stakeholder input. We would do 

much information gathering as part of both of those processes. 

Senator LANKFORD. OK. So, would the reset process start before 

2016 begins, if that is going to take more than a year, because, obviously, you have to promulgate that annual amount—— 

Ms. MCCABE. Right. 

Senator LANKFORD [continuing]. For 2017 by November 2016. If 

the reset, which I would agree, will take longer in the conversation, 

because it will be very contentious, to say the least—there are a 
15 

lot of different players that are very interested in this—and again, 

I come back to there is a lot of conversation about corn-based ethanol, but the mandate in the statute is it decreases and cellulosic 

increases and we have to be able to figure out, how does that work 

when cellulosic does not exist in near the quantities that are needed. 

Ms. MCCABE. Yes. 

Senator LANKFORD. So, as that reset comes through, when do you 

anticipate that is going to go out for comment and will start? 

Ms. MCCABE. So, our highest priority right now is to make sure 

that we get the 2014, 2015, and 2016 volumes out. That does not 

mean that we do not have our staff already thinking about the 

kinds of things—— 

Senator LANKFORD. Sure. I understand. 

Ms. MCCABE [continuing]. They need to be thinking about for the 

reset. So, I do not have a schedule for you on that reset rulemaking, but I can assure you that the minute 2016 is done, we will 

be turning our full attention to the 2017 rule and to the reset if 

triggered. 

Senator LANKFORD. So, this is what I would like to do. There has 

to be some ‘‘around the water cooler’’ conversation about how the 

reset fits into this and the timing. You are very good at planning 

on some of these things and trying to back up. If we are going to 

have it ready by here, we have it to the Office of Management and 

Budget (OMB) by here, we have to have it here—I mean, you can 

plan all that stuff out. That means you have to have a draft proposal here and a proposed rulemaking here. 

Ms. MCCABE. Yes. 

Senator LANKFORD. We need to know that agenda, and so if I 

give you a month and time period, can you come back to us with 

the reset timeframe, at least, on what the major calendar events 

will be on a reset? Is that a reasonable amount of time to give us, 

the calendar? You are not going to have to tell us what the reset 

is, but just when the major decision points will be made and when 

notice and comment will come out. 

Ms. MCCABE. I will be happy to go back and talk with folks 

about how much clarity we can give you on that in a near timeframe, Senator. 

Senator LANKFORD. Yes. If we can do that in a month, where we 

can come back and say, let us at least get the schedule and so we 

will know where things are going and give you enough time to be 

able to lay that out, that would be very helpful to us to get some 

level of predictability. Senator Heitkamp. 

Senator HEITKAMP. Thank you, Mr. Chairman. 

First off, I do not think we know what volumes of cellulosic ethanol can be produced because we have not given the market certainty, and so we have stalled out investment. And, so, I do not accept that, somehow, there will not be enough supply to meet the 

standards. And, so, let us not pre-suppose or prejudge that discussion in terms of what is going to happen in the marketplace. 

But, I would rather get back to the rule that we are talking 

about and debating. I think I mentioned it in my opening comments and Senator Ernst followed on that in kind of walking 

through EPA’s legal authority to basically deviate from the statu-
16 

tory mandates. And, when you said the legal justification is inadequate domestic supply, I think most ethanol producers would tell 

you, to them, domestic supply means the supply of ethanol, and 

there is plenty, certainly of biodiesel, in the marketplace. In fact, 

we stalled biodiesel. We shut down biodiesel facilities because we 

did not have enough access to the market. 

So, to me, inadequate domestic supply means what it means to 

anybody who would read it, which is the supply of the product, the 

fuel. 

When you say you can use that language to basically justify a refueling infrastructure waiver, did you look at the legislative history 

from 2005 when the House language pretty clearly addressed this 

by saying, based on the determination that there is an inadequate—domestic waivers—based on the determination that there 

is an inadequate domestic supply or distribution capacity to meet 

the requirement. What does it tell you if amended out of that is 

distribution capacity and all you have is domestic supply? What 

would that inform you in terms of the legislative history? 

Ms. MCCABE. Well, Senator, what I need to look at is the language in the statute. What it tells me is that there was—— 

Senator HEITKAMP. If you are going to, I think, broadly read the 

language, inadequate domestic supply, and read it in what I would 

consider a fairly twisted way, you should look to the legislative history. That is what lawyers do. That is what judges do. They look, 

what was the intent of Congress, and when Congress repealed the 

language or rejected the language in their final analysis, distribution capacity, what does that mean? What does that rejection 

mean? 

Ms. MCCABE. Well, to me, it means that there was discussion 

and there was interest in this issue specifically from at least some 

members and that that language did not end up in the statute. 

Senator HEITKAMP. And, what does it mean for lawyers when 

there is language that is proposed on one side, you go to conference 

and you eliminate or take out language? 

It means that is not the intent of Congress to use that for waiver. You cannot bootstrap the domestic supply language to deal with 

refueling infrastructure. Now, I am not unsympathetic to the challenges that you have in implementing this, but let us not pretend 

that you have a very good legal argument here for the waivers that 

you have done. 

I mean, that is the frustration, is that the statute was designed 

to give the marketplace certainty. The statute was designed to basically set standards with very limited waiver requirements. EPA 

took it on themselves to expand that language and create huge uncertainty, which now you are saying, see, there is not a supply. 

Well, there is not a supply because we did not have certainty for 

investment. 

And, I am not trying to beat up on you here, and, obviously, I 

have been a frequent flyer on this issue. You guys have numerous 

letters led by me and other members on this, and our frustration 

level has been extraordinarily high, because our producers come to 

us and say, what? What about this is confusing? 
17 

And, let us for a minute, and not with any kind of concession, 

take corn-based ethanol and the blend wall. Explain to me why 

there was a necessity to reduce mandates on biofuels, biodiesel. 

Ms. MCCABE. We are not reducing mandates on biodiesel. The 

statute takes biodiesel mandates up to one billion gallons, and then 

after that, it is up to EPA to increase the volumes, and we have, 

in fact, done that every year, and this proposal will again increase 

volumes for biodiesel above the minimum in the statute every 

year—— 

Senator HEITKAMP. But there is still room within the statute for 

increased volumes for biodiesel. 

I want to turn with the time I have left to talk a little bit about 

Argentinean biofuels, and I think Senator Sasse opened up this 

issue, as well. Earlier this year, EPA announced approval for Argentinean biodiesel as we have seen high volumes of imports of 

Brazilian sugarcane ethanol. Both of those have the potential to 

displace domestic production and especially undermine advanced 

biofuel volume mandates. 

I think it is really important that we understand a little bit better on how you consider imports in the equation when you are developing RVOs. This is enormously frustrating. At a time when we 

are shutting down domestic supply of biodiesel, we are importing 

from Argentina, and that makes no sense to us if, in fact, one of 

the reasons for this program is fuel energy sufficiency for America. 

Ms. MCCABE. Yes. Well, Senator, the statute does not distinguish 

between domestic and imported fuel. It sets volumes of total fuel, 

and that is not limited to domestically supplied fuel. So, we pay attention to what is happening in the global markets. There are 

many things that affect the amount of biofuel that could be imported to the United States. The United States also exports 

biofuels. So, we do pay attention to that. 

The amounts of biofuel coming in from foreign countries is relatively small, and I know there is a lot of discussion and debate 

and disagreement about that and I have encouraged people to 

make sure that they give us information about this during the comment period so that we can understand what everybody is seeing. 

But, the bottom line is that the statute does not distinguish between imported and domestic fuels. 

Senator HEITKAMP. When you look at the numbers, it is a third, 

but, I think, obviously, a market is North Dakota is into Canada, 

and then Canadian biofuels comes into the East and West Coast. 

So, I understand the movement of biofuels. But, I think that when 

we are trying to create a program that meets the goals established 

by Congress, whether people on this panel agree with the program 

or not, and you probably have a pretty good sense that there is 

some—yes, there is some dispute about—there are so few things we 

disagree on, but this happens to be one. 

But, the program that the agency who has the responsibility for 

administering the program, I think, has first and foremost always 

has to ask the question, what is the intent of Congress and what 

do we know about the intent of Congress, and I think that there 

has been a serious discussion not just among colleagues here, but 

certainly within the industry, and a serious concern that the intent 

of Congress has not been followed here. 
18 

So, I look forward to seeing the schedule. I imagine that we are 

going to have ongoing discussions, whether it is in the Agriculture 

Committee or wherever we have these discussions. This is an issue 

that is not going away any time soon. As Senator Lankford said, 

we are on reset and, obviously, trying to finish these years. But, 

the worst thing that we can do is not get this done timely. And, 

I do not mean by just sending out a draft rule. I mean by finalizing 

a rule so the marketplace has a certainty. We will live to fight 

about whether that number is right, but we cannot see this delay. 

It is incredibly disruptive. 

Ms. MCCABE. Yes. 

Senator HEITKAMP. Thank you, Mr. Chairman. 

Senator LANKFORD. This is the second round, and we are going 

to go through and do some more open conversation, and we have 

been through this before in other settings. But, this is going to be 

a more open dialogue. We will have an opportunity to be able to 

talk here on the dais and include you. 

I would mention one thing to my colleagues on this as far as congressional intent of the law. I would remind everyone, especially 

when we are discussing corn-based ethanol, if there is anything 

that is clear in the law, it is clear that corn-based ethanol is a decreasing percentage of what is used in the days ahead. By 2022, 

if I remember the number correctly, 44 percent of the ethanol that 

is used in the United States is to be cellulosic based on the law. 

So, corn continues to decrease and cellulosic continues to increase. 

It is one of those very clear areas. And, you have a big challenge 

in that we are not producing near the amount necessary. 

I do want to ask you about the cellulosic, because EPA chose to 

do a shift in definition, somewhat. In 2013, if I recall correctly, 

adding in the compressed natural gas (CNG) and the liquefied natural gas (LNG) based fuels in the cellulosic category, as well, that 

bumped up the numbers for cellulosic and the capabilities. But, because the cellulosic technology has not come through completely 

with switchgrass and the wood products and everything else, the 

compressed natural gas has been included in that category. 

Was there a discussion of that shift? Does that continue? Is that 

some of the conversation that CNG bleeds over into that cellulosic 

category more? Where does that go from here as far as definitionally? 

Ms. MCCABE. Well, Senator, I may need to get back to you on 

some of the specifics of that question, but the additional fuels that 

are coming into the market qualify as cellulosic fuels, and so as 

those come in, then we add those to—— 

Senator LANKFORD. Talk us through those and those definitions, 

the new fuels that are in the cellulosic—— 

Ms. MCCABE. Well, the biggest one that has happened recently 

is biogas, which was recently approved and is being produced in encouraging amounts. So, that is one. We also have various ones that 

are in process. Pennycress is one, and there are several others. I 

would be glad to provide you with details about what we have in 

the pipeline and recently proposed and recently approved. 

Senator LANKFORD. The proposed volume that I see here, somewhere around 206 million gallons for 2017, I believe the mandate 

is somewhere around four billion gallons for that year. So, again, 
19 

I do not see any way possible that we are not going to be into significant reset time period as we approach, especially that number 

on the cellulosic side of things and where that goes. Help me understand—we have talked a little bit about 2017 and reset—the 

methodology that you set for 2017, I would assume, is going to 

bleed through to 2022, when this really is very open at that point, 

when the statute stops giving clarity and EPA has the ability to 

be able to help determine amounts in all these, as you do with biodiesel right now. Where does that go? Is the example of biodiesel 

a good example to be able to look at the path that EPA considers 

for 2022? But, as we are looking on the horizon here, 2022 is not 

that far away anymore. What is the best model that we can see 

heading toward 2022? 

Ms. MCCABE. Well, you are right. I mean, it is both near and far, 

and we have much to do in between here and there, in particular, 

assuming that all the triggers are met for reset, a relook at those 

volumes. So, I think that that will be an important place to think 

about that. 

I will say that it is our hope that the approach that we have laid 

out in this proposal is one that we can rely on and that people can 

look to as a way of thinking about how to predict the volumes in 

the future years no matter how the reset rule comes out in terms 

of changing the volumes in future years. 

Senator LANKFORD. So, that is what I am trying to get at. So, 

as everyone looks at it—and there is a tremendous amount of capital investment, whether it is in Iowa, doing capital investment on 

plants, or wherever it may be. Everyone is looking on a 10-year 

window in capital planning. What is going to happen in 2022 is incredibly significant right now, because a facility does not come up 

to speed in a year, a year and a half, 2 years. 

Ms. MCCABE. Mm-hmm. 

Senator LANKFORD. So, that investment portfolio is incredibly important. 

Ms. MCCABE. Mm-hmm. 

Senator LANKFORD. When could we expect any kind of clarity 

from EPA on how this path is going to lead to 2022 and what happens at that point? So, give us a picture of the kind of timeframe 

that you hope to accomplish, knowing that there are billions of dollars of investment that will be affected that have to have some advance planning. 

Ms. MCCABE. Right. So, the standard itself set levels out to 

2022—— 

Senator LANKFORD. Correct, which we will not make any of. 

Ms. MCCABE [continuing]. And in our view and in the view of 

many, those very standards are not ones that, at least in the near 

term here, we think are achievable. Our job, as given by Congress, 

is in the case that those volumes turned out to be problematic to 

achieve, to reset those volumes. That is the rulemaking in which 

we would have the public discussion, we would go through the information and reset those volumes into the future, which then 

would provide that certainty into the future. The idea would be 

that those would be the volumes that would be reasonable, responsible, achievable, meet the intent of Congress in terms of growing 
20 

these volumes so that we would not need to be talking about waivers in the future. 

Senator LANKFORD. So, let me try to help provide some clarity 

here, and I want others on the dais to be able to join in this conversation. 

When you talk about the reset, are you talking about a reset of 

resetting a number or resetting a method of how you will get to the 

number each time? 

Ms. MCCABE. My understanding is that our job is to reset the 

numbers. 

Senator LANKFORD. But that is the annual. I am talking about 

the process of the reset. We are talking about two different processes, the process toward setting the annual number, but then the 

process of how we will do reset. Will that process on how we do 

reset, a process of how we will set the new numbers or resetting 

what the new numbers will be? 

Ms. MCCABE. So, the statute gives us a number of factors to consider. 

Senator LANKFORD. Right. 

Ms. MCCABE. So, my understanding is that is what we will do. 

We will undertake a rulemaking looking at all of those factors to 

determine, then, what the numbers should be in that reset rulemaking for years out into the future. 

Senator LANKFORD. OK. So— 

Ms. MCCABE. And then the annual—I am sorry to interrupt 

you—— 

Senator LANKFORD. No, that is all right. I was just going to say, 

help us understand ‘‘into the future,’’ how far in the future you 

hope to go when you talk about the reset side of things. 

Ms. MCCABE. Well, the statute goes through 2022—— 

Senator LANKFORD. Correct. 

Ms. MCCABE [continuing]. So, I am not prepared to discuss 

today, because we really have not thought about that issue, about 

what would be our authority or responsibility to go beyond that. 

But, we would be certainly looking at the statutory numbers. 

Senator LANKFORD. So, the hope is to get some sort of reset number that goes out multiple years with the annual rule coming out 

on time in November. 

Ms. MCCABE. Mm-hmm. 

Senator LANKFORD. OK. Then I would just say to you again, it 

will be extremely important for all players involved that we start 

working toward certainty on 2022 on this, because there is a tremendous amount of capital planning that is going on right now—— 

Ms. MCCABE. Yes. 

Senator LANKFORD [continuing]. Either direction. Senator Ernst. 

Senator ERNST. Yes, and thank you, Senator. 

Yes, the cellulosic has been an important move in Iowa. We have 

biodiesel. We have the ethanol, and that is up and running. Innovation and technology is advancing so rapidly, and we have those 

investors that really do want to join in. But, I think, Senator 

Heitkamp alluded to earlier that the investors, when there is not 

a set volume out there, they are very hesitant to engage. So, we 

have the two cellulosic plants that are up and moving, and we have 

a third set to come online. But, for any State, any investors in any 
21 

State to move forward, they want to know that there is going to 

be a set volume and a demand for those products. 

Ms. MCCABE. Mm-hmm. 

Senator ERNST. So, first, we have to know what those volumes 

are in order to invest in this area. But, we also need the infrastructure that is available, and again, you have used that as an argument why we need to lower some of the volumes. But, I think one 

of the original intents of this was to incentivize getting some of 

that infrastructure into place, and you will see that high volumes 

of biodiesel, ethanol are used throughout the Midwest. We have the 

plants, but we also have the infrastructure in place to support it. 

So many of the flex vehicles are being purchased on our coasts 

and they do not have the type of infrastructure that we do in the 

Midwest. So, I would argue that we need to continue investing in 

this area and make sure that it is available. It is all about consumer choice, as well. 

So, Senator Peters had asked something, and I would like you to 

followup a little bit about the greenhouse gases, because I find it 

really ironic that this Administration’s public focus has been very 

much on clean environment and reducing greenhouse emissions, 

and yet what you are proposing is actually a direction that will increase those carbon emissions by less utilization of these biofuels. 

So, maybe if you could comment a little bit about that and why you 

are not looking at greenhouse gas emissions. 

Ms. MCCABE. Well, an underpinning of this program is reduction 

in greenhouse gas emissions, and as more and more biofuels get 

into the system, especially advanced and cellulosic advanced 

biofuels, that is where the real reductions can be. As you know, in 

order to qualify as an advanced biofuel, the greenhouse gas emissions need to be 50 percent less, and for cellulosic, 60 percent less, 

and that is where we want the growth to be. 

And, that has been happening. Of course, volumes have been increasing steadily over time, not to the level that the statute called 

for, but they have been steadily increasing over time. Our proposal 

here would take cellulosic biofuel from 33 million gallons in 2014 

to 206 million gallons in 2016. That is substantial increase, not as 

much as Congress anticipated or hoped for, but from where we are 

now, that represents substantial growth. 

And, so, my point to Senator Peters was that in each individual 

annual volume rule, we do not reanalyze greenhouse gas emissions, 

but we know the greenhouse gas reductions associated with these 

different categories, and by growing the volumes, by setting the 

targets to drive that growth in a responsible way, we will be seeing 

reductions in greenhouse gases, because every gallon of gasoline 

that is replaced by cellulosic advanced biofuel is greenhouse gas 

emissions saved. 

Senator HEITKAMP. I would just like to make a point about this, 

you talk about the proposed 2016 standard for cellulosic biofuels, 

those fuels with the lowest greenhouse gas emissions, is more than 

170 million gallons, which is six times higher than the actual 2014 

volumes. 

I think it is worth noting that it is likely because three commercial scale refineries came online in 2014 and one more is slated for 

the end of this year. Those bio refineries were made possible by the 
22 

investments that were created before the disruption with the rule. 

And, I think when you look at since then, guess how many proposals have been online. Zero, because we disrupted through this 

rule and through the lack of timely rulemaking, we have disrupted 

the investment. 

We need to get back, and I think no matter what our view of the 

wisdom of the RFS is, if it is a law, we expect it to be administered 

in a way that Congress intended, and I think Senator Lankford is 

on the right track when he says, tell us what the schedule is, tell 

us what the plan is, because if we can debate the wisdom of this 

law here in Congress. That is our job. But, it is your job to administer this the way Congress intended and that means doing it timely, because I think we can meet these standards if the investors out 

there know that they will have access to the market. 

And, so, it is just critically important that we not automatically 

assume that we are going to have a crisis on cellulosic biofuels or 

ethanol before we actually give the certainty to the market and let 

the market produce. 

Senator ERNST. I would agree, and with the cellulosic, as well, 

we have other advances coming with algae, and, of course, investors are not looking at that in a way that we had hoped they would 

if we would have had those set volumes. So, again, technology is 

advancing. It is a great renewable energy source. It is taking, basically, waste products and producing a fuel that is very low greenhouse gas emissions. 

So, I would agree. I think we have a law in place. We need to 

understand what those volumes are. But, we do need to move forward and follow the intent of Congress, and I am at a point where 

I do not believe that the EPA is doing that. But, I hope that we 

can work through these issues. Thank you. 

Senator LANKFORD. Let me do something that everyone at home 

is going to be shocked at. Let me take the side of the EPA—— 

[Laughter.] 

And say that the cellulosic was a great theory and there are a 

lot of people experimenting with it. No one has been able to make 

it in a quantity that is affordable yet, and that has been the challenge of it. The largest manufacturer of cellulosic products just 

went bankrupt this past year, and it was a major hit in the cellulosic market because they were the leading company. But, after 

a decade of trying to make this technology work, they could not 

make it work at a price that people could afford. 

Now, there is a lot of experimentation with this. It is not close 

to being market-ready, and the challenge that the EPA has is that 

they have a mandate by 2022 to get to 44 percent of the ethanol 

that is used in the United States to be cellulosic, and no one can 

seem to crack the code to be able to make this in a way that is actually affordable. While there are lots of folks experimenting with 

switchgrass and wood and with stalks and with algae and other 

great ideas, so far, that is actually not a technology that exists. 

In some ways, I feel like we are the mode of the 1970s when 

President Carter said that they were starting all this research on 

solar power, and by the year 2000, 20 percent of America’s energy 

would be produced by solar power. It is now 2015 and we are not 
23 

close to that number. A declaration and Congress even setting a 

number does not mean the technology is going to actually catch up. 

And, on the greenhouse gas side of things, the challenge that you 

have is that you are also working on a rule right now on groundbased ozone, and ethanol increases ozone. In fact, EPA’s own study 

has come out and said, if we hit the RFS totals, the ozone levels 

go up across America, in many areas, even significantly. So, the 

challenge that we have right now is that we are dealing with a balance of how do we get RFS totals and use Corporate Average Fuel 

Economy (CAFE) standards, decreasing the amount of gas that we 

are using, and actually hit new ozone standards. One of the three 

of those, or two of the three of those are not going to work because 

they do not work together at this point. 

How far off am I on that? 

Ms. MCCABE. Well, there is a lot in there, but I think I would 

agree that there are a number of factors that have affected the development of cellulosic fuels. We work very closely with the producers and the developers. We spend a lot of time with them so 

that we can understand the challenges that they are facing. And, 

we certainly hear, as you have described, a desire for clear certainty in the market and ambitious targets, which we think we are 

proposing here in this rule. But, we also hear about other challenges that those fuels have had in getting up and running. And, 

I think everybody wants those types of fuels to be successfully produced and marketed, and the more that that happens, the prices 

will come down and people will use them. 

But, I would agree with you, Senator Lankford, that there are 

many factors there. 

Senator LANKFORD. And, you asked about the E85, as well. You 

have this assumption that E85 is going to dramatically increase in 

usage, even 6 months from now. I am trying to figure out the assumptions that went into that, because my understanding is there 

are enough E85 vehicles on the road right now to meet the E85 requirements, but many of those individuals that have E85 vehicles 

choose to purchase E10. Now, that is a consumer preference there. 

So, I am just trying to figure out why EPA assumed that E85 

would suddenly jump when there are E85 owners that choose not 

to use that product. 

Ms. MCCABE. Well, you are correct that there are lots of flex fuel 

vehicles on the road today that could use E85. Our information is 

that there are about 3,000 stations in the country that provide E85. 

I live in Indiana. I see that at my gas station, but not everybody 

does. 

There are issues with the pricing of it, because the energy value 

of E85 is different than the energy value of gasoline. I think people 

do not fully understand that, and this is a long process to change 

people’s understanding of their choices on transportation fuel, and 

prices need to move in directions that will encourage people to understand that that can be an economical choice for them. And, I 

think that that is a multi-year process and we have seen progress 

there. 

Our proposal here is intended to be forward looking and optimistic because we understand that Congress wanted these fuels to 

be driven into the market. 
24 

Senator LANKFORD. Right, but I am trying to get at the actual 

methodology of picking it. Is the assumption just we are going to 

try to push the issue here, but there is not a method to say, we 

anticipate on car purchases, or anything else, or availability, that 

people that have flex fuel vehicles will start using this product 

more. 

Ms. MCCABE. So, we have looked at a variety of things. We know 

that there are flex fuel vehicles out there that could be using E85 

that are not now. There is not a precise mathematical formula, 

Senator, that we have used. 

Senator LANKFORD. It is more of an aspirational goal rather than 

an actual, we see this and so we anticipate this use? 

Ms. MCCABE. I would say it is an optimistic goal, but informed 

by our judgment, our understanding of the way the market has developed so far, what, in our judgment, it can do. EPA has regulated 

the fuel market for many years, and this is all laid out for people 

to agree or disagree with in the proposal and we welcome that. 

But, it was all those things that went into that with, however, respecting Congress’ clear intent that volumes of these fuels increase 

and that it was going to take a push in order for that to happen. 

Our understanding is that Congress meant more renewable fuel to 

be used than would be used without the RFS. 

Senator ERNST. I would say, too, that, just going a little bit further, I mean, I have a diagram—you can pull this up on the Internet—where all of those E85 pumps are located, and you will see 

that most of them are in the Upper Midwest. And, again, a lot of 

flex fuel vehicles that are bought out there, they simply do not 

have access to E85 because those pumps and the infrastructure is 

not yet available. So, I think, if we had that infrastructure in place, 

we would see E85 use go up. 

So, again, I do want to go back. There are challenges to cellulosic 

and algae as we move forward. But, again, so many other types of 

fuels have seen this problem in the past, and fracking is a great 

example of that, and I support fracking. But, it took many years 

for that to become a cost effective way of extracting fuel. 

So, we have those challenges, but, again, we are moving forward 

in Iowa. Many States are moving forward with cellulosic. The 

greenhouse gas emissions go down tremendously with that product, 

and I think that is a goal that everybody would like to see. Thank 

you. 

Senator HEITKAMP. As long as we are talking about cars, if you 

look at an analysis, and I think Senator Lankford alluded to engines, and we obviously have had a great deal of discussion in the 

Agriculture Committee, including the National Association for 

Stock Car Auto Racing (NASCAR) drivers who come in and swear 

by this as a fuel source, so I think the jury certainly is not back 

on that issue. 

Senator LANKFORD. For a $3 million NASCAR vehicle. [Laughter.] 

Senator HEITKAMP. But, if you look at an analysis of model year 

2015 warranty statements and owners’ manuals, I think you would 

see that it reveals that auto manufacturers explicitly approve the 

use of E15, which we have not talked about yet, in approximately 

two-thirds of new vehicles, and E15 is approved by EPA for all 
25 

2001 and newer vehicles, which really accounts for 80 percent of 

the fleet of automobiles out there. 

Was this taken into consideration, or how did you take this into 

consideration when you developed the rule? 

Senator LANKFORD. And, I do not want to interrupt. I do want 

you to answer that question. I have an Appropriations hearing that 

I am going to have to run back and forth to a quick vote on, and 

so if you will excuse me, if Senator Ernst can take the chair here 

at this point, I will return. And, I do not want to sound like Douglas MacArthur all of a sudden, but, yes, to be able to come back 

and forth. But, I have a quick vote in Appropriations and I will be 

right back from there. So, if Senator Ernst would take the chair, 

as well. But, Senator Heitkamp is tough to work with, so hold your 

own. [Laughter.] 

Senator HEITKAMP. Thank you. 

Ms. MCCABE. So, E15 is very promising as a way to get more 

ethanol into the system, and there has been a lot of discussion 

about vehicles using it and not using it. There is relatively little 

getting into the system now. I think there are fewer than 100 stations across the country that are offering E15. 

Again, I think that this is an issue that we all need to be focused 

on, how we can increase people’s use of this fuel. And, as more and 

more new cars come into the system and people understand and 

are comfortable that this is a fuel that they can use in their vehicle, that those attitudes will change and prices will change and the 

infrastructure will come. It is a challenge, Senator, I grant you. 

Senator HEITKAMP. I think if you looked at the chart that Senator Ernst just showed you, you would see is a partnership with 

State Governments, basically providing incentives to build out the 

infrastructure doing the things that we need to do on a State-based 

level. 

I am curious about how much you have heard from actual jobbers or people who have filling stations, as we used to call them 

in the old days, not the major distribution centers but those guys 

who now are concerned about the quality of their tanks, concerned 

about the regulation of E15. What is the conversation back and 

forth between EPA and the actual convenience stores and filling 

stations? 

Ms. MCCABE. They convey to us challenges, and, of course, wanting to meet the needs of their customers, looking at the cost to install new infrastructure and uncertainties that they might have 

about new technology and just being able to cover the cost of putting that infrastructure in by being able to sell that product. 

Senator HEITKAMP. Do you think you have clear rules on what 

EPA’s requirements are for that infrastructure? 

Ms. MCCABE. I believe so. 

Senator HEITKAMP. A lot of them do not think so. A lot of them 

think there is a level of uncertainty—— 

Ms. MCCABE. OK. 

Senator HEITKAMP [continuing]. And as a result, I think that 

they tend to be concerned about maybe over-building infrastructure, over-building their tanks so that there is no concern at all 

later on. 
26 

Ms. MCCABE. That is something I would be happy to take back 

and look into, Senator. 

Senator HEITKAMP. Great. So, we are not just talking about 

blender pumps and all of those issues, the infrastructure issues 

and what that means. We are also talking about long-term concerns about moving to E15. And, so, it would be good to figure out 

what role EPA plays in providing the certainty to our filling stations as it relates to converting and moving into E15, which most 

vehicles now basically are approved for. 

Ms. MCCABE. Yes. Glad to look into that. 

Senator HEITKAMP. OK. 

Senator ERNST. All right. And, with the E15, too, the impact to 

our U.S. consumers, if they do have that choice and are using E15, 

it is typically anywhere from a nickel to a dime lower, even, than 

the E10. So, across the United States, then, the impact to our consumers is that there is a savings of about $5 to $7 billion per year 

in their own pockets. So, it is something that I think we need to 

take a look at and continue to refine. 

Did you have any further questions, Senator? 

Senator HEITKAMP. As long as we have some time here, and the 

Chairman— when the cat is away—— [Laughter.] 

When we look at, I think, the Renewable Identification Numbers 

(RIN) prices, and it is so complicated for a lot of people to understand, but your latest proposal talks about the lack of correlation 

between RIN prices and gas prices as well as the need to have 

higher RIN prices to drive investment and infrastructure. However, 

your proposal had the opposite effect in the RIN market, and even 

DOE has said we will not hit 10 percent blends by 2016. 

When you guys were plotting this out and fretting, did you consider the disruption that that would have to the RIN market and 

what that would mean kind of long-term, and does that inform how 

you want to deal with this in the future? 

Ms. MCCABE. So, I think that one statement you said, Senator, 

that everybody can heartily agree with is that this is incredibly 

complicated—— 

Senator HEITKAMP. Yes. 

Ms. MCCABE [continuing]. Very complex. I have been working on 

this now for 2 years and I feel like I am beginning to understand 

it. But, I am not an economist and so I—there is much discussion 

about this issue that goes on with people with that kind of training 

and understanding. 

What we tried to do was to provide some more information for 

the public record about what we had seen in the RIN market. But, 

we would certainly not purport to say that RIN prices are—the relationship between RIN prices and what we set in the volumes is 

very complex and is affected by many things, not just the volumes 

that we set. 

Senator HEITKAMP. Do you not think you were a major driver, 

volumes were a major driver? 

Ms. MCCABE. I would not say it is not a factor, but the prices 

of feedstocks and the many things that go into producing fuel have 

a lot to do with this, as well. So, it is not simple. It is complex. 

We pay attention to RIN prices, but we do not formally factor 

them into our decisionmaking because it is so complex. And, it is 
27 

1The prepared statement of Senator Baldwin appears in the Appendix on page 35. 

clear, Congress established the credit system as a way for this program to work and for obligated parties to show compliance. So, it 

is a fact of how the program works and as long as biofuels are more 

expensive to produce than gasoline, you need the system that Congress set up in order to drive those volumes up, make the fuels 

more affordable for people so that it gets into the system and it 

builds and then people use it. 

Senator HEITKAMP. I guess we will have to agree to disagree. I 

think it was a major factor in what happened in the RIN market 

and I think we want to avoid that, at least avoid people like me 

coming back to you and saying this disruption has created an additional disruption in the marketplace. 

I want to ask the Chairman, to have Senator Baldwin’s statement introduced into the record.1

Senator ERNST. Yes, without objection. 

Senator HEITKAMP. Thank you. 

Senator ERNST. Yes, and I could go on all day, I think, about the 

value in having renewables. It has been exciting to see the development over the course of time, and we do have to remember that 

this is an energy area that is fairly young compared to other types 

of energy sources that we have had here in the United States, and 

we have seen support of those industries for over 100 years. 

So, again, relatively young, developing source of energy, and, 

again, clean burning, I would say, and very supportive of our economy here in Iowa, which is why, even though it was not expressly 

written in the law that we use domestic sources of fuel, I would encourage that in the future as something that we take into consideration rather than utilizing some of these biofuels from other countries, as well, so that might be something that we need to look at 

in the future. I think that would help increase our production, obviously, here in the United States, but promote the infrastructure, 

promote the development and further technology advancements. 

Senator Heitkamp, are you—— 

Senator HEITKAMP. I just have a final comment, and it is probably not exactly on target here, but we have been talking a lot 

about advanced agricultural manufacturing, meaning let us use 

products that are renewable. Let us use green products. If you look 

at the fuels industry, the fuels industry has been a building block. 

It has been a foundational piece. The technology that was developed in fuels later leads to a lot of great advanced manufacturing 

using renewables. 

And, so, this has an environmental effect beyond just the fuels 

market. This has an environmental effect on all kinds of building 

supply issues, all kinds of issues as we build out more and more 

renewable sources for building supplies, and as Senator Stabenow 

would say, you can eat your car seat because it is made out of soybeans. 

And, so, I think this has been an industry that has been very 

beneficial to the United States of America, and I think beneficial 

to consumers. And, we want to make sure that when Congress has 

a policy and it pretty clearly states these are the reasons for waivers, that the agency who is responsible follows that policy. 
28 

Now, like I said, I am not unsympathetic, but, in part, this was 

to drive the infrastructure. And, when you retreat from the number, it has the opposite effect and it just creates a spiral to a place 

where we do not want to be, because that would not be a place that 

would be consistent with congressional intent. 

And, so, I look forward to working with you, Ms. McCabe, and 

talking more about kind of what the future holds. I look forward 

to hearing the outcome of the hearing that you are going to have 

in Kansas City. I know it will be very robust. I know you are probably getting tons of comments already. And, hopefully, a relook at 

some of the issues that we think are possible that will, in fact, be 

more consistent—adjusting the rule. And, I would particularly ask 

you to look at that in the biodiesel area. 

Ms. MCCABE. Yes. 

Senator ERNST. Yes, and just on a final—is the Senator on his 

way back? 

And, just, kind of in some of my conclusions, I think we need to 

get these volumes set, but I think we need to take a very close look 

at what we are doing and how we want to encourage the market 

to develop, and again, that vicious cycle in place. Right now, commodity prices are extremely low, so when you see $3 corn, now is 

a good time to be developing that area and working with ethanol 

or cellulosic. So, I would encourage a good, hard look at that, and 

again, look forward to working with you. 

Again, if you would, please, emphasize to the EPA Administrator 

Gina McCarthy that we would absolutely love to have her in Iowa 

and be able to show her the process from the time that seed goes 

into the ground to the time we are producing it and sending it out 

to consumers. 

So, we will at this point just recess for just a few minutes and 

we will wait for Senator Lankford to conclude the meeting. Thank 

you. 

Ms. MCCABE. Thank you, Senator. 

[Recess.] 

Senator LANKFORD [presiding]. I will return us back from recess. 

I apologize for the delay. You will be glad to know we are voting 

and working through the Interior appropriations, which EPA has 

a little bit of connection to, as well. So, I apologize for that back 

and forth. 

When I stepped out, the ongoing conversation was on E15 and 

I would have appreciated being in that dialogue, as well, so I want 

to get a chance to followup with you on that, as well. 

Ms. MCCABE. Yes. 

Senator LANKFORD. You and I have had this conversation already 

about E15. EPA believes vehicles from 2001 forward can handle 

E15. 

Ms. MCCABE. Yes. 

Senator LANKFORD. Manufacturers on the whole do not. If you 

actually go to the manufacturers, in the last year, year and a half, 

more manufacturers are allowing E15 to be within their warranty. 

Would you agree the vast majority of the manufacturers do not believe E15 fulfills their warranty from 2001 until about 2013? 

Ms. MCCABE. I would not want to characterize the number. I 

know that that is an issue for some manufacturers. 
29 

Senator LANKFORD. All right. I would tell you, I have a chart 

that walks through that and actually details each and every manufacturer and if they have any models at all that allow E15 to be 

within their warranty. It has only been within the past year, year 

and a half, that even the majority, even above 50 percent of the 

manufacturers, have any vehicle model at all that would say E15 

would be tolerable in their engines. 

The challenge we have is increasing the E15 really means you 

are increasing the E15 on new vehicles. So, it is a fairly limited 

amount, since most vehicles are older. My truck is 12 years old 

that I drive. That is common for most Americans, to have an older 

vehicle. 

Ms. MCCABE. Yes. 

Senator LANKFORD. So, the challenge is increasing numbers of 

the E85, and the assumption there that we are going to have this 

large increase in E85 and that there will be a jump on E15 use, 

and when there is a limited number of locations even to get it at 

this point—I am still going back to the assumptions and the pattern here—— 

Ms. MCCABE. Yes. 

Senator LANKFORD. Now, again, we can talk about viability and 

energy usage and all that stuff, but it is a pattern of how do we 

discern what is coming in EPA and have the method of making 

their decision. 

Ms. MCCABE. We did not actually assume hardly any E15 in 

these proposals for the reasons that you cite, and the quite few 

number of stations that offer it currently. 

Senator LANKFORD. Right. OK. When we talk about the biodiesel, 

the same thing with the biodiesel, which that product has consistently exceeded the expectations of amount that is manufactured. 

Ms. MCCABE. Yes. 

Senator LANKFORD. What I want to try to get is a percentage or 

the method of your counting on the small percentage of biodiesel 

that cannot handle lower temperatures. We have a certain percentage that is out there, that I believe it is 56 degrees and down, it 

starts turning into a solid. So, that does not work for part of the 

biodiesel. So, the question is, how did you do that estimate, and the 

method of that, and the expectations, because biodiesel is now in 

open amounts. Obviously, EPA can set the amount from year to 

year based on what they feel like is best information. 

Ms. MCCABE. Yes. 

Senator LANKFORD. How are you trying to split the two there, to 

say that this part can basically be used in El Paso, Texas, and 

Southern Arizona year round but everywhere else, it is not going 

to be used year round, versus what is used year round? 

Ms. MCCABE. Right. So, as you know, we look at these things 

from a national perspective and we look at the increases in the 

amount of biodiesel that has been used. I think I would say, Senator, and we would be glad to followup and confirm this for you 

with more details, is that with the volumes that we are proposing 

here, we are not in danger of exceeding the amount that the system can absorb without getting into any sort of performance problems. 
30 

Senator LANKFORD. So, what I am trying to get at is the assumption for the growth of the specific line of product is not the line of 

biodiesel that has a difficult time with lower temperatures. You are 

assuming the growth, and the information is leading you to say the 

growth is in the area that is not the part that has a difficult time 

with the lower temperatures. 

Ms. MCCABE. Well, I am not sure it is different fuel, is it? We 

will followup with more specifics. 

Senator LANKFORD. Yes. There is one that uses animal products, 

basically and that part, that type of biodiesel, if you get below 56 

degrees, it does not work well, and so you have to use it in warmer 

climates where you are never going to get below that, which there 

are lots of parts of the country that do. But, if you start heading 

north very far, you are going to run into problems on that. 

OK. Let me ask a little bit about the Congressional Budget Office 

(CBO) reporting, when they start talking about prices. According to 

CBO, the RFS, if it was repealed, or if its future mandates were 

kept at previously proposed 2014 numbers, corn-based ethanol production would remain at about 13 billion gallons was their assumption, that, basically, corn-based ethanol is already in the fuel system, it is a viable fuel, the price is where consumers want to be 

able to purchase it. 

Ms. MCCABE. Yes. 

Senator LANKFORD. CBO estimated, if the mandate went away, 

we would still stay at about 13 billion gallons of corn-based ethanol, even without the mandate. So, when you are looking for the 

push there, you are actually trying to push some of the products 

into other places that the market is not requesting, I guess, at that 

point, but since the congressional mandate is to be able to push 

this out into other areas. 

Ms. MCCABE. Yes. 

Senator LANKFORD. The challenge is, of that 13 billion that CBO 

has estimated that the market really requests and wants, do you 

use that just as a baseline? Is that a number that you all use in 

your estimations? Do you consider consistent what CBO estimated 

there? If the mandate went away totally, that 13 billion would still 

be there? So, is that some sort of baseline number, or how is that 

number used in your own reasoning? 

Ms. MCCABE. So, that number, I believe, is reflective of the 10- 

percent amount that ethanol now fills—— 

Senator LANKFORD. Correct. 

Ms. MCCABE [continuing]. In gasoline. 

Senator LANKFORD. Our blend wall location. 

Ms. MCCABE. The blend wall location. I think, Senator, that we 

do not actually set a standard for ethanol in the rule. Ethanol fills 

in, because it is considered conventional biofuel. So, we know 

where the blend wall is likely to be, of course, depending on how 

much fuel is actually used, and so we take that into account. And 

then, as you reflected, we understand that the intent of Congress 

was to push more into the system than what E10 accommodates 

on its own. So, we build from that. 

Senator LANKFORD. OK. So, the issue that is interesting, and 

again, this is not your study, but in 2014, CBO, when they studied 

it, said if the mandate went away on corn-based ethanol, their 
31 

study said 13 billion gallons would continue to be used. It is in the 

system. It is built in. People like to use it. 

Ms. MCCABE. Yes. 

Senator LANKFORD. But, it also said those 13 billion gallons will 

continue to be used and the price that consumers would pay for 

gasoline would go down, which I thought was an interesting study 

to be able to look at. There is a lot of push and pull right now, and 

again, that is not what this hearing is about, is to talk about what 

happens in the long term to the RFS. But, I wanted to be able to 

remind folks that the people that do the scorekeeping around here 

have reminded us corn-based ethanol works in the market regardless, without the mandate, and the prices would actually decrease 

for consumers if we would remove this mandate and pull it away 

from us. 

I am going to go back to something we started talking about earlier, and that is the ozone issue. 

Ms. MCCABE. Yes. 

Senator LANKFORD. So, I know you have to balance both of these, 

as well as many other things. How are we doing balancing this in 

the internal conversations on what happens to ozone levels and 

how ethanol does increase ozone levels, and then the standard that 

is coming. 

Ms. MCCABE. Yes. So, the setting of the ozone standard is a 

health evidence-based decision that the Administrator needs to 

make. What the ozone standard is about is the Administrator’s determination about what represents a safe and healthy level of 

ozone in the air for people all across the country to breathe. We are 

not permitted by statute, and this has been confirmed by the Supreme Court—that decision, that health-based decision, is not to be 

influenced by implementation issues. That is dealt with in other 

parts of the Clean Air Act and that has been the work of States 

and industry and the EPA for many years. 

So, we do our job under the part of the Clean Air Act that says 

we set the standard so that the American people know what is the 

right level of ozone to have in the air. We then work with the 

States and others on assessing where across the country those levels, monitored ambient ozone levels, exceed that standard, and that 

is not everywhere in the country, not by a long shot. So, once you 

identify those areas, then you look to see what are the emissions 

that are contributing to those high ozone levels. 

The way ethanol can impact ozone is not uniform across the 

country. It relates not just to the use of ethanol, but the production 

of ethanol. So, that could be a very localized situation, and those 

may be areas where ozone levels are healthy already and meet the 

standard. So, it will be a situation that we will look at place by 

place to determine what needs to be done in order to make sure 

that Americans have healthy air to breathe. 

Senator LANKFORD. We are still on the same challenge on that, 

Ms. McCabe, and that is we have a mandate to use more ethanol 

and a coming mandate to decrease the ozone, even if it has some 

effects on it. Those two are going to be in competition. We are literally going to have cities and communities that have an increasing 

mandate for ethanol, but then they are going to have to find ways 

to use more public transportation or to decrease their lawnmower 
32 

usage or major industrial complexes will have to relocate or to be 

able to retrofit based on one mandate competing with another one. 

I know this has to be an ongoing conversation, when, literally, 

communities are going to have to say, you are telling us to do this, 

but then telling us we have to change our stuff when this rule is 

actually part of the issue. 

Ms. MCCABE. Yes, but it is really a question about in any given 

area what is contributing to those high ozone levels, and I do not 

think it is fair to conclude, Senator, right now, that there are areas 

that will be significantly affected by increased NOx associated exclusively with ethanol use as we look at areas that might not need 

a future ozone standard, if there is one. 

Senator LANKFORD. Correct, but we will have locations that will 

be 0.2 outside the range and that 0.2 could very well be ethanolbased, could be part of it. So, the numbers are so close in this. If 

it was a big gap, I would understand that. But, they are not in 

many of these locations. It is very close, and ethanol will be one 

of those contributing factors to it. 

So, this is just going to be a large cost issue for a lot of communities and I am trying to figure out how EPA is going to address 

that. And, again, we will not have to solve it, the two of us. There 

is going to be a different piece of legislation. A different Committee 

is going to do that. I am trying to figure out the process for how 

that decision is going to be made, because that 0.2 differential will 

be very significant in quite a few communities. 

Ms. MCCABE. I do understand, and I very much appreciate your 

point. The history of States and EPA working together to reduce 

ozone levels has been to find the most cost effective ways to reduce 

the precursors to ozone in areas where ozone levels are high, and 

that is the process that would ensue if the standard is changed. So, 

there are lots of things that contribute to ozone non-attainment in 

areas that have that problem. 

Senator LANKFORD. But, would there be the possibility that in 

that portfolio of options, that a community could say if they are 0.2 

outside of the ozone level, one of the options that would be on the 

table is that they do not have to use as much ethanol in that region? 

Ms. MCCABE. I think that would be a very complicated situation, 

given the competing mandates that we have. 

Senator LANKFORD. And that is why I bring it up, is because you 

have competing mandates, and that is why I am trying to figure 

out the process of how to make this decision, because if they are 

going to have 10 things on the table but ethanol, a decreased use 

of ethanol in their area is not an option when we know that is a 

contributing factor, why could at least that be on the table, as well, 

because now you have two competing mandates. 

Ms. MCCABE. I think that is a good question, Senator. 

Senator LANKFORD. OK. We will have to resolve that in the days 

ahead, and I would like that to be in the set of options that a community could have to make a decision, rather than have a hit on 

several different industrial areas when we know, also, the ethanol 

use is one of the contributing factors, at least to allow them the 

flexibility to be able to make that decision. 
33 

Ms. MCCABE. Yes. Fuel use has always been an issue in considering how to meet ozone standards, and the agency and the States 

have balanced the various requirements that the Congress has laid 

out on fuel use against other options that they have. So, it will be 

an ongoing conversation and I take your point. 

Senator LANKFORD. All right. I appreciate that. 

The other issue deals with the foreign importation of some of the 

fuels that are coming in. Senator Heitkamp brought it up before. 

Senator Ernst brought it up before. 

Ms. MCCABE. Yes. 

Senator LANKFORD. It is a question that several folks have in the 

biodiesel and other areas, to ask the question, if this was about 

protecting the environment and American energy options, was the 

intent—and that was clear in the statute, as well—the more that 

we allow foreign importation of some of the fuels, how that affects 

the actual amounts and the targets. If a target is going to be set 

but a third of it is going to be fulfilled by foreign, should that be 

included? Again, there is a different conversation whether we allow 

foreign to come in. 

Ms. MCCABE. Yes. 

Senator LANKFORD. But, is the target number for domestically 

produced or all that is used? 

Ms. MCCABE. We understand that the target is for all that is 

used. 

Senator LANKFORD. So, could that be fulfilled, basically, with entirely foreign-based fuels? If at some point we had difficulty or we 

had a competitive group that was able to produce it much cheaper 

overseas and be able to bring it in, could the entire requirement 

be produced overseas? 

Ms. MCCABE. I think it is highly unlikely, but—— 

Senator LANKFORD. It is probably unlikely, but—— 

Ms. MCCABE. Yes. 

Senator LANKFORD. But, you are still targeted. Just, basically, it 

does not matter whether it is the foreign or domestic on that, either one. It is just setting the number of what we are going to 

use—— 

Ms. MCCABE. Of what we are going to use in this country. 

Senator LANKFORD. That will be an ongoing issue. It is something that we are going to have to deal with in the days ahead, because, again, the clear mandate of this is really—it is focused on 

American energy efficiency, I guess, and the way we are able to 

provide our own energy independence. If we are not doing that, but 

instead we are importing it, what is the difference between importing oil or importing sugarcane or importing biodiesel products? 

Ms. MCCABE. Mm-hmm. 

Senator LANKFORD. Importing is importing. At that point, we are 

still not energy independent, of working in that direction. 

What other comments would you have for me in the days ahead, 

for this planning and your timeframe that you have not had the 

opportunity to be able to talk about yet? 

Ms. MCCABE. Well, Senator, I really appreciate the opportunity 

to come and speak with you today, and you were true to your word 

that you provided an opportunity for all of us to have a conversation. I know that there will be a lot of discussion in the months 
34 

ahead as people are getting their comments in to us. I just want 

to assure you again how focused we are on this program, how much 

we understand and appreciate and agree with so many of the 

things that have been urged by the Senators today in terms of administering this program the way Congress intended. 

I will reflect again that there are a variety of views, even about 

what the statute requires and what Congress intended, and I assure you that we are doing our very best job, as we should as the 

executive agency charged with administering this, to do our best to 

interpret the statute in the way that we think is appropriate, is 

best for the American people, and to make sure that we have both 

ambitious and responsible efforts to implement the Renewable Fuel 

Standard, and that is my commitment to you. 

Senator LANKFORD. OK. Thank you for that. In the days ahead, 

you know full well we will have an ongoing conversation about the 

reset and that process, the time period and some predictability 

there, even to know when it is going to start, when people can start 

to give comments, what the assumptions are going to be in that 

conversation, because the reset is coming and it is coming extremely quickly. So, 2022 is both near and far, as you mentioned 

before. Twenty-seventeen is not very far away at all—— 

Ms. MCCABE. That is right. 

Senator LANKFORD [continuing]. And the parameters for that will 

be set by November 2016, so we are very close and we will be in 

the middle of the ongoing conversation for that. So, that is the one 

piece of this that I know we have to maintain a very public conversation on, but a very clear conversation on when the rules will 

be set and how we actually get back on schedule. And, because 

while we are back on schedule as of November of this year, all the 

rules change suddenly again for November 2016 and I am concerned that that is going to roll over, as well, in the days ahead. 

Before we adjourn, I would like to announce that on July 16, the 

Subcommittee will hold a hearing on regulatory issues where we 

hope to have the Administrator of the Office of Information and 

Regulatory Affairs (OIRA) will testify here. 

This does conclude today’s hearing. I would like to thank Ms. 

McCabe for your testimony, both written and your oral testimony, 

and for the brief recess that we had to endure. 

The hearing record will remain open for 15 days, until July 6 at 

5 p.m. for the submission of statements and other questions for the 

record. 

This hearing is adjourned. 

Ms. MCCABE. Thank you. 

[Whereupon, at 11:05 a.m., the Subcommittee was adjourned.] 
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