marine asking the same question and gets the answer no sir, he is no longer president of the united states. marine same old man, and he said same thing again. at this point the marine is frustrated and sighs and said i told you three days in a row he is no longer president of the united states. the little old man with a twinkle in his eyes said i know that, i just love hearing you say it. prase /* plays[applause] >> and the marine stands to attention, salutes, and says see you tomorrow sir! morning is coming, it is thanks

to each and every one of you. god bless you and god bless the united states of america. >> coming up on c-span2. a hearing on fuel standards and then paul ryan discusses corporate tax reform. after that we hear from white house budget director on the upcoming debate over the debt ceilings. thursday a senate subcommittee

looked at the epa's renewable fuel standard program. the head of air and aviation testified about raising the amount of fuel required for transportation. this hearing is an hour and 5 0 mntsinutes minutes. sg good morning, everyone. the ideas here are lotable and improve energy security and improve the environment. day old product domestication has doubled. and lower demand has been anticipated and the increase use of natural gas improved energy

efficiency lowered greenhouse gas emissions. many years we chased the mandates. the epa is required to release the volumes by november 30th of the proceeding years to allow those covered to plan for the future. the epa hasn't met the deadline since 2009 and are waiting for the final version of the 2014 volume even though the year in question has been over for six months. the agency cited significant controversy as the reason they could not finalize the volumes. the program is unworkable current form and there is controversy around this and opinions circling around the particular issue. on john 1st 2015 the promoseed man dated for '15 and '16 were releaseed together. we need to see if the delays are

unavoidable every year. the rierms include increased and unattainable at times levels of renewables and the quotas of the gasoline supply over the last year and a half. the epa has chosen to twice -- to wisely work for the volume and the goal of breaching the wall which is the time increased for consumer use to handle higher ethanol fuels. advance fuel is required in the vest and glad to be reset by the epa starting next year and increases the regulatory uncertainty. this is triggered due to the agency waving significant percentages and face production not being as high as imagined by congress. 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 production is not close to what was predicted in statute. after a decade of implementation we must ask ourselves if the goals of yesterday with worth the increase cost to the gas, food, viermenvironment, price of increase to animal feed and increase in grocery bill. real concerns over engine damage and additional cost in motorist at the pump. new studies are highlighting the impablth impact on the land water and air specifically ozone. we have the opportunity to review the epa's program and i anticipate an insightful hearing and i am pleased janet mccabe joined us. i recognize the ranking member for opening statement. >> thank you. i want to start by saying i wish

we were not having this hearing chatty . i wish there was not a question over the epa's ability to implement the rfs as congress intended. but we are in a place where epa created, i can unknowninglyingly produced this. this is costing us investment. it is costing us environmentally and jobs. i am a strong support of this and my state is one of leader producers. we are number two. i don't know where oklahoma is on the rank but north dakota is number two for oil, we have gas and we have wind sources and a lot of bio resource. this is a huge issue to my

state. i can tell you this is part of the all of the above. when we look at what rfs means to north dakota alone the industry represents $2 spa.billion in manual input and almost 9,000 jobs in oklahoma and 4300 in wisconsin and 4.2 million in economic output with over 19000 jobs. in iowa, obviously a major ethanol producer $19.3 billion with almost 74,000 jobs in the mix. so i think i could go on. i think these numbers are important to highlight because the rfs is critical to the economy and that is why it is so important it be administered correctly as congress intended. i am glad the epa released the proposed rules for 2014

obviously late. i don't think anyone can say releasing those numbers in '15 where there is not finality to the rule and won't be until the end of '15. '14 rules were not kindly and that created a great amount of disruption. but i want to take and praise this important first step and thank ms. mccabe for her leadership in making it happen. the proposal continues to innorgnore congressional attent and sight availability of capacity. the statute only allows for inadequate waver and not a distribution capacity waiver. in 2005 the house had a waver for distribution capacity but the final bill passed by the house and senate did not. i hope when the epa puts out final rule in november they will cruets this flu-- cross out this

flaw and if they do that the program will work fine as it did in the first years. i think certainty needs to be our top concern when it comes to better regulation, slayings legislation, or anything we do here. we spend a lot of time talking about predictability as a central opponent to a proper business environment. providing that certainty to businesses and prayers producers is critical. congress provided that certainty i believe in 2005 and 2007 when the passed and amended the rfs with volumes and guideianceance on when they may we beebe waved. because of the consequences i mentioned the contribution they

made to the states when managed out of line with congressional intend you can imagine the negative consequences. the advance bio fuel sectors have lost $13.7. 54 plants in 30 states for bio fuel closed because of the lack of interest from the epa. 30% of bio fuel producers scaled back production and 6-10 idle production all another. our north dakota bio diesel plan stalled production of bio diesel for the first part of 2015. i must emphasis this is not a problem with the rfs but a problem with the administration of the rfs. as one testimony for the record noted, epa's failure to issue rf

rfs rules shouldn't be read as the program is failing. i look forward to hearing from ms. mccabe on the epa's past success of the program and how they can get back to those past successes. i am particularly interested in the process and how that can be amended. this isn't a hearing about repealing or adjusting the rfs but how to make the program administered in a way that provides currentertainty. thank you for showing up and thank you for the opportunity to make a statement. >> we will proceed with testimony from janet mccabe who is from the office of air and radiation and the assistant administrator. it is good to be able to see you again. in tradition of the subcommittee

we swear in all witnesses appearing before us. i would like to ask you to stand and raise your right hand. do you swear the testimony you are about to give will be the truth, the whole truth and nothing but the truth so help you god? >> i do. >> thank you. you may be seated. let the record reflect the witness answered in the affirmitive. you are welcome to build on the written or torqueyou can talk about a totally different thing. as we have done in the past we will have questions and you and i did before the first round is set questions for five minutes each and after that it is open dialogue where we will have interchange here and with you. >> thank you, chairmanage

lankford, and ranking member heitkamp and the subcommittee. there are four categories for renewable fuels. these standards apply to producers and importers of gasoline and diesel fuel. on may 29th epa issued a proposal that would establish the standards for years 2014-2016 and the volume of bio mass diesel for 2017. we will finalize the standards by november 30th at which point we will have returned to the statutory time line for issuing the renewable standards. epa recognizes that the delay in issuing the standards for 2014 and 2015 has led to uncertainty in the marketplace chatty this proposal establishes a path for responsible growth in bio fuels and provides the certainty the market place needs to allow the low carbon fuels to develop. congress set annual standard for

bio fuel use that increase every year and included tools known as the waiver provisions for the epa to use in the event it determined the statutory volumes could not be met. our recently issued proposal seeks to make sure the growth continues consistent with congressional intent using the waiver in a manner to establish responsible and achievable standards. it addresses three years of standards and sets the requirement for a fourth year. for 2014 we are proposing standards at levels that reflect the actual amount of bio fuel used domestically in 2014. for 2015 2016 and 2017 the proposed standards would provide for steady increase over time. the proposed volumes reflect our considering of two essential factors. first that the market can respond to ambitious volume targets and there are limits

today to the amount of volumes that can be supplied. the steady volumes we proposed means bio fuel will address climate change. we are optimistic about buffjbi=io fuels fuels. reason why it isn't developing is slower movement and the shortfall of the supply. a decline in gasoline consumption rather than growth and constraints in supplying certain bio fuels to consumer. ethanol at 10% greater than gasoline. if gasoline demand continues to trend downward or remain flat

increase in ethanol will require greater use of blends with higher ethanol content. the epa has taken steps to pave the way of increased use atmosphere higher ethanol brand including granting partial waivers and e-15 in light duty trucks beginning with model year 2001. the epa is recognizing there is limitations to increase the fuels including near term limits on fueling infrastructure. we aim to balance congress' clear intent to increase renewable fuels over time to address climate change and increase energy security and real world circumstances such as the blend wall that 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 20146 we are proposing to set total renew involve volumes at 9% higher and advance bio fuels at 10% higher and bio diesel higher at 14%. we believe they ruare achievable with the standards congress provided to the epa. the epa has taken other steps to improve the administration of the prm. we have improved the quality and transparency of the petition policy for new bio fuels pathways. it is important to remember the rfs program is only one part of the picture. there are other programs looking to support bio fuels and bio fuels' infrastructure and we work with them closely. we will have a public hearing on

june 15th in kansas skitcity, kansas. we intend to finalize the rule by november 30th of this year. i thank you for the opportunity to serve as a witness at this hearing and look forward to your questions and discussion. >> thank you. ranking member and i are going to defer our questions until the end. we go to senator burns. >> thank you chairman and thank you ms. mccabe for joininguts us. we know you are working hard in this area so i appreciate that. i appreciate your testimony. i believe this is not only an economic issue but 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 bio fuels creation producing 3.8 billion gallons of clean burning ethanol and 230 million gallons of bio diesel and that is from 2013. we are home to two state of the art ethanol facilities with another coming into production later this year. and three taylors across the state offer affordable ethanol and bio diesel combinations.

the original intent of the rfs was to create consumer choice for clean fuel by spurring were introduction and infrastructure. now the epa is using the lack of infrastructure as an ex cuse for setting bio fuels lower than what was originally mandated. this issue is of importance to the state of iowa and the nation. insuring domestic security and promoting innovation in the next generation of bio fuels is crucial as we move forward. as you may know, ms. mccabe in february i invited epa administrator gina mccartny to visit iowa and see the impact of the delayed release of the rfs volume. additionally next week the in

entire iowa delegation sent a letter to the administrator urging her to hold a hearing in our state. can we expect either of these to happen? >> thank you senator. i cannot speak for the administrator's schedule but i can take back to her you raised this this morning and her office can respond. >> thank you. >> in terms of the hearing, as i mentioned, we had are holding a public hearing in kansas city kansas. we have a regional office there. there is great interest in this issue across the coaptuntry and it is also a challenge to chose a location of a limited number of hearing wheeze-- hearsingsdying hearings -- hearings we are able to have. as of yesterday, we had 250

people signed up cruclueincluding a number of people from iowa. we larkook forward to good attendance there. >> if you would emphasis that is an open invitation. we want to see the epa administrator in iowa to experience the difficulties we have had with the lack of action on part of the epa. if we can move on to infrastructure and congressional intent. in your testimony, you site lack of available refilling infrastructure as justification for not setting the rfs higher. 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 limited consumer choice and the availability to get more of those bio fuels into the marketplace. despite the clear direction from congress, epa has now decided to use available refueling in infrastructure as a condition to wave the standard even though congress expressly rejected that when they set the law. can you explain why the epa is blatantly overlooking the law? >> sure. i would be happy to discuss this and this is an issue which there are many views and happy to explain our's. the language in the statute as you observe gives two reasons for epa to wave the standards and the one we are looking at is the one that says inadequate domestic supply. and i understand there is

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 the language in the statute. we lay this out at some length in the proposal and will be happy to share that with you if you have not seen that. our interpretation of the term is congress inteneded for the fuels to be produced and used. that is where the value in greenhouse gas reduction and diverse energy supply and as you say consumer choice comes. when you have a situation where fuels cannot be delivered to

consumers on the time frame set out in the statute and congress provided this waiver authority we believe it is a reasonable thing to reduce the volumes to a level that still will comply with congress' attempt to drive the fuel. this is a big thing congress did in the rfs. it was calling for big and significant change. and the prmogram stetchs out over a number of years. in order to change a system in this dramatic way it is taking time. 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 could simply not be appropriate. >> it is there to use and set

ambitious but responsible revel fe lefbldz levels. >> we are caught into cycle not knowing the volume and delayed production and research and the furthering of those types of fuels. without the standards being set, we don't know where to go. so i just continue to say we need reliable energy sources for all of our consumers and we would like them to make that choice but thank you very much mr. chair. >> thank you. senator sas. >> thank you for being here. i have a series of questions that will follow up on senator erns ernst's questions. what you hear about corn production values and from the department of agriculture are different. there is a lot of discussion about coordination and i will

come back to that but i want to associate with these questions. has the epa use studies or metrics to modern how the proposal rules will affect transportation prices? >> the way that the rule or program affects the prices is complicated. we did not attempt to estimate impacts on transportation fuel prices. >> no studies or models were used? >> we look at them but we ourp sefbldzourselves didn't look at them. >> would it be possible to get a list of the stud sneezeies? >> sure. >> did you conduct models on how it would affect international trade and if you looked at changes in trade flows and bio

fuels between the united states and brazil? >> those are issues that many people look into and we pay attention to work others do but we didn't do that ourselves. >> when you evaluate the proposed rules and deciding are those studies and what you consult something we could have access to? >> anything that we looked at you can certainly look at yourself. >> grit. thank you. in your testimony and this is picking up with the senator, you say the epa will continue to engage stakeholders and work with the usda and doe. in april the department of education released -- i'm sorry, energy released their review and stressed doe and dod would be continuing research and demonstration activities to develop drop-in bio fuels particularly for use in aviation and large vehicles.

in addition, the reports states the department of energy would be providing technical support to the states, community communities and private entities. the usda crop projection reports on corn state the amount of corn used in calendar near 2014 is estimated to be 14.2 billion bushels up from the 2013 estimate and average yields for the u.s. are estimated to be at 171 bushels an acre. i think the usda is saying there is plenty of corn. when you listen to corn growers in your my state, they are not blebing the cross consultation across the department and with divinity ge pp different geography

and wonder if you are skeptical of corn. i wonder how we can believe you work with the other agencies. >> i can assure you we do. i have been involved with staff and leaders from those agencies working on this and other issues and there is 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 agriculture economist and don't try to be. that is their job to do so. we must work with them and we do. >> it just feels to a lot of

people trying to make production decisions that it is hard to reconcile the different agency's views of the corn crop. i am a cosponsor of s-1239 that expands wavers of the pressure lichlt lim taxis setags -- limitations and i have questions on these. the state of nebraska is able to provide us with a breakdown of the number of registered vehicles by fuel source including mobiles capable of using flex fuel. would you be able to provide an epa estimate of how many vehicles in the u.s. fleet with support fuel above e-15 how many can use flex fuel and can

you elaborate on the breakdown of fleet and amount of vehicle that could support categories of fuel. >> we do have numbers to answer them. i don't have them with me but be happy to provide them. >> senator peters. >> thank you, mr. chairman and thank you ms. mccabe for the epa's hard work and i work forward to working with you in the months and years ahead. as a senator from michigan i am always looking for way do is diversify the u.s. vehicle fuel supply and making the nation more energy independent. the rfs is a proven program creating new clean naeshlgenergy jobs and strengthening the agriculture department. i appreciate the plansattempting of

the balance but i don't believe they reflect congress' intended goals for the rfs. the intent was to set ambitious targets to spur innovation and invest in infrastructure to bring the bio fuels to market. beef we have to stay the course i believe and keep the rfs in tact. this is an improvement over the 2013 proposal but the requirements for the next two years have consequences for the economy, energy security and environment. the epa's delay in rulemaking have chilled necessary investment in advance bio fuels just as they reached commercial development. the latest proposal says lack of supply is a reason to reduce volumes. it wasn't the congressional intent for let the epa talk about the size to waiver authority. i joined a letter signed by 37

senators stating the condition being listed falls outside of what we think is a defined waver authority. in relation to the infrastructure investment, i believe it is clear theistsat the proposal presses fuel price and eliminates incentives for infrastructure and investment. this is troublelinging given it was rising and now it stalled as a result of the delays. what is your plan to get infrastructure investment made if this proposed rules is finalized without any changes? >> we think there are a number of things that will happen. you yourself cited and many others the certainty of having the volumes out there is critical for people to know whauzwhat is coming. i think this proposal signals an intent of the administration and the epa to steadily grow volumes over time and that certainty is

important. the usda which was mentioned a minute ago is committed to looking to enhance and improve infrastructure. it announced a program to help do that with grant funds to help build infrastructure and we think that the combination of those efforts, things we are doing in order to streamline the pathway approval process so we can get these new and innovative pathways approved and in the market will help and that as you put those things together, certainty from the regulatory side, and support from usda and others across the administration, and people realizing that more fuel more choice, will attract consumers to want these fuels that those things will help us move in the right direction and continue to

make real progress. >> so as you mentioned, one of the importance of certainty and before we had certainty the impact it has. the bio technology industry showed $13.7 million was lost since the propose. does that sound accurate? isn't at a big concern? >> i could not speak to that number but we are concerned about the lack of certainty and that is why we are getting the program back on schedule >> do you see the amount of fuels blended increasing in the future years? if so, how do you see that playing out past 2014 /*2014? >> there was little newelfuel in the

market and now there is more. we have conversations with stakeholders across the byo fuel industry. 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. >> greenhouse gas emissions, were they considered? has the agency prepared the role in 2014? if so, what were the results? >> greenhouse gas emissions are vapid fund lit leaamental for the purpose. for the annual fuels volumes we don't relook at the greenhouse gas emissions. sgr

>> i look forward to working with you. this is a critical industry and part of the nerjinternally independence. and i represent michigan which we-like to believe is the center of the auto industry. i look forward to working with you. >> thank you. >> ms. mccabe i appreciate you being here. let me walk through history we walked through together. 2010 final rule for the rfs was four months late, in 2011 good near it was only two weeks late 2012, one and a half months late 2013 nine months late, 2014 it was 18 months later and counting and 2015 six months late and counting. the challenge is once we get into '16 '17, and '18 how does

this get better and how does rfs get on schedule to be ready by november or has congress put a requirement on epa they cannot fu fulfill? >> senator, i think that is a very fair question. epa does not like missing deadlines either. i think that a couple things happened as we talked about last time when i visited with you that made 2014 particularly challenging and led to the significant delays. and i am an optimistic person. my aub sejob is to implement this program and meet our statutory obligation in terms of time frame. i know confidant we will do that. through this rulemaking this year we will get ourselves back on track. we have -- 2014 was a

significant year because of the impact of the ethanol, e-10 blend wall which was a significant issue that people engaged in very, very robustly. and that time was going to come in the implementation of the rfs. we learned a lot from that process and the conversations we had with people and our proposal reflects a very different approach to implementing to required volumes in the statue evaluating those in light of the fact that we are now at and beyond the e-10 blend wall. and the approach we have taken now, which as it lays out three years, can show the epa sinking over that three year period of time is reflective of the fact that we of course have finalized the rule and want to

make sure we understand everybody's views on it but if we were to continue with that approach we would have an approach 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 of the time. so it is not that we -- >> i don't think there is anyone that believes you are not working on it. it is just matter of the method. let's say '14, '15, and '16 are finalized november 30th. then comes november of '16, it is reset time. uled i would assume you would agree there is no way we will get the stat ukeutes of '17. with the assumption the way the

statute is written, corn-based ethanol continues to decrease as required and the other is increasing required by statute. if there is a clear aspect of the law that is clear in the law. that is also not possible based production. so there is a quandary come november of 2016 trying to plan for 2017. it looks like he will announce 2016 on time but 2017 is coming. sow how do we avoid that? sgr ow >> you mentioned the reset requirements and the statute lays out circumstances we considered a reset which is a significant undertaking because it is for multiple years in the future. >> would you agree on the decreasing the number by 50 percent? >> yes. i would agree. and depending on how these volumes turn out, we may hit the

reset trigger for the other volumes as well. we think it makes a lot of sense to focus a reset on all volumes at one time and it will provide a lot more certainty to everybody to do that. we recognize that we have an ongoing obligation to set the annual annual volumes. we will be looking to plan work to accommodate setting annual volumes and proceeding to consider resetting if we trigger the reset for the volume. >> let's talk about how we get comment in conversation going on a reset because setting the proposed volumes is one methodology there is conversation on and you will finalize that by november 30th of this year. we have to do the reset and volumes next year. is that two different processes? a comment period based on the reset and annual? will they be combined?

i would assume you are creating a method on how to reset in case it has to be done in 2018 or '19 to evaluate from there. two different processes or one? >> i think it is likey a reset process would take longer than the one year required for the annual annual volumes. why this isn't firmly decided, my expectation is it will 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 processes. >> would the recess process start before 2016 begins if that takes more than a year? you have get the annual amount by 2016. if the reset, which i agree will take longer because there are a lot of different players interested and there is a lot of conversation on corn hp based

ethanol but it decreases and the other increases and we have to be able to figure out how it works when cell doesn't work in the quantities needed. as the reset comes through, when do you anticipate that will go out for comment and start? >> our highest priority is making sure we get the 2014 '15, and '16 vollumes out. i don't have a schedule for you on that reset rulemaking. but i can assure you that the minute 2016 is done we will turn our full attention to the 2017 rule and the reset. >> this is what i would like to do. there has to be 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 backup if we are going to rate it. we have to have it here by then.

and you can plan all of this stuff out and have a dry proposal here and propose making here. we need to know that agenda here. if i give you a month can you come back with a reset time frame on the major calendar events on a reset? is that a reasonable amount of time to give us the calendar? not tell us the reset but the major decision points and when a comment comes out. >> i will be happy to go back and talk with folks about how much clarity we can give you in a near time frame. >> if we can do that in a month and get the schedule that would be helpful to get a level of predictability. senator heitkamp. >> thank you, mr. chairman. first off, i don't think we know what volumes of cellotic ethanol can be produced because we have not given the market certainty

and we stalled out investment. i don't expect somehow there won't be enough supply to meet the standards. let's not presuppose or judge that discussion in terms of what is going to happen in the marketplace. i would rather get back to the rule we are talking about and debating. i think i mentioned it in my opening comments and senator ernst followed and walking thew epa's legal authority to deviate from the statutory mandates. when you said it was inadequate domestic supply i think most ethanol producers would tell you domestic supply means the supply of ethanol and there is plenty certainly bio diesel in the marketplace, we stalled bio diesel and shutdown bio diesel facilities because we didn't

have enough access to the market. inadequate means what it means to anyone who would read it which is the supply of the product/the fuel. when you say you can use that thooto justify a refueling infrastructure did you look at the legislative history in 2005 when the house language addressed this saying based on the inadequate domestic waiver and the determination there was inadequate supply to meet the requirements, what does that tell you if amended is distribution capacity and all you have is domestic supply. what does that inform you in terms of the history? >> i would lead to look at the

language in the statute -- >> if you are going to you know 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 edge slept fb -- legislative -- history and when congress repealed or rejected the analysis what does that rejection mean? >> to me it means that there was discussion and there was interest in this issue specifically from at least some members and that language did not end up in the statute. >> what does it mean for lawyers when there is language that is proposed? you go to conference and you a eliminate or take out language? it means that is not the intent of congress to use that for waver. you cannot bootstrap the

domestic supply language to deal with repealing the infrastructure. let's not pretend legally you have a good legal argument for the waiver that you have done. i plehnmean that is the frustration, i think. the statute was designed to give the marketplace certainty. the statute was designed oo set standards with limited waiverver requirements. epa took on themselves to expand the language and create uncertainty and now you are saying there is no supply but there is no supply because we didn't have certainty for investment. i am not trying to beat up on you. and i have been a frequent flier on this issue with numerous letters by me and others on this. our producers are coming to us saying what about this is confusing? and let's, for a minute not with any concession take

corn-based ethanol and the blend wall. explain to me why there was a necessity to reduce mandates on bio fuel and bio diesel? >> we are not reducing mandates on bio diesel. the statue takes them up to one billion gallons and then after that it is up to epa to increase the volumes and we have done that every year and this proposal increases volumes above the minimum and the statute every year. >> but there is room within the statute for increase volume for bio diesel. i want to turn with the time i have left to talk about argentinian bio fuels. earlier, the epa announced

approval for such bio diesel as we have seen high volumes of import from brazilian sugar cane ethanol. 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 our deals. this is enormously frustrating. we are shutting down bio diesel here but importing from argentina and that makes no sense. >> senator the statue doesn't distinguish between import and domestic fuel. it sets volumes of total fuel and that is not limited to domestically supplied fuel. we pay attention to what is

happening in the global market. there are many things that affect the amount of bio fuel that could be imported. the united states exports bio fuels also. we do pay attention to that. the amounts of bio fuel 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 look forward and encouraged people to make sure they give us information about this during the comment period so we can understand what everybody is seeing. but the bottom line is the statute doesn't distinguish between imported and domestic fuels. >> when you look at the numbers it is absurd. but i think a market in north dakota is sharing with canada and i understand the move lit litmentlit litment -- move litment of bio

fuels. and rather be on the panel agree with the program and you have a good sense there is some dispute i think first and foremost what the intent of congress is. and i think there has been a serious discussion not just among colleagues here but certainly within the industly and a serious concern -- industry -- that the intent of congress is not being followed. i look forward to seeing the schedule. and i would imagine we will have ongoing discussions whether it is in the agriculture committee or whenever we have them. this issue isn't going away any

time soon. senator lank fpford said we are on reset trying to finish these years but the worst thing we can do is not get this done timely. i don't mean by sending out a draft rule. i mean my finalizing the rule. we cannot see this delay. it is incredibly disruptive. >> this is the second round of more open conversation. we have been through this before but this is more open dialogue and we will talk here as with you on it. i would mention one thing to my colleagues on this as far as congressional intent of the law, i will remind everyone especially when discussing corn-based ethanol, if anything 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 correctly, 44% of the ethanol in

the united states has to be cell based on the law. you have a big challenge that we are not producing near the amount. i want to ask you about this. because the epa chose to do a shift in definition somewhat. in 2013, if i recall correctly adding in cng and lng-based fuels in the cell category as well. that bumped up the numbers and the capabilities but because of the technology not coming through completely with switch grass and wood products and everything else the compresed dick -- cop -- compressed natural gas is there as well. how is that looking? >> i will need to get back to you on the specifics of the

question. but additional fuels are coming in to qualify as cell fuels. as those come in we add them to -- >> talk us through those and those definitions of the new fuels. >> the biggest one that happened recently is bio gas which was recently approved and being produced in encouraging amounts. that is one. we also have various ones that are in process, penny crest is one and there are several others. i would be glad to provide you with details about what is in the pipeline. >> somewhere around 206 million gallons for 2017 and i believe the mandate is 4 billion a gallon that year. i come back to i don't see any way possible we will not be in significant reset time period as we approach this especially that number on the cell side of things and where that goes.

help me understand the methods you set for 2017 ricks we'll, we think this bleeds through and this stops giving clarity and epa has the ability to determine amounts as you do with bio diesel right now. where does that go. is that appear example of looking at the path the epa is considering for 2022? for looking on the horizon, 2022 is not that far away. what is the best model we can see for 2022 sn? >> you are right. it is near and far and we have much to do assuming the triggers in that for the reset are looking at the volumes.

i will say it is our hooch the approach we laid out is one we have we can relay on and 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. >> that is what i am trying to get at. there is a tremendous amount of capital investment whether it is in iowa or wherever it may be everyone is looking at a ten year window on capital planning. what happens in 2022 is incredibly significant right now. dot ... ...

it. >> in the near term, our jobs as given by congress in the case where this turned out to be problematic and that is the rulemaking in which we would have this public discussion and we would go through the information and reset the volumes into the future which would then provide that certainty into the future. the idea would be that those of be would be the volumes that are reasonable and responsible and achievable in terms of growing in volume.

>> let me provide some clarity here joining in on the conversation. you are talking about a reset of number and reset a method of how you will get to the number each time. >> that is the annual. the annual number. that process of how you reset the number we will reset where the new numbers will be your. >> the statute has a number of factors to consider in my understanding is that that is what we will do retake a look at all these factors to determine what the numbers should be in that rulemaking for going through years in the future. >> can you help us understand

how far you hope to go when it comes to this underthings? >> the statue goes through 2022. and so i am not prepared to discuss this today because we really haven't thought about that issue about what would be our authority or responsibility to go beyond that but we would be looking at the statutory numbers. >> the hope is to get some kind of reset number. and i would just say to you again that it would be extremely important for all players involved. in either direction. >> thank you. we have biodiesel, we have the ethanol, and that is up and running with innovation and technology and they have

investors that really need to join in and the senator alluded to it earlier that the investors when there is not a set volume out there they are very hesitant to engage. we have this up and moving and for any stage and they want to know that there is a set volume and the demand for those products. and especially in order to invest in this area and we need an infrastructure that is available. you know especially why we need to lower the volume. and one of the original things that was the intent was getting this infrastructure into place.

and that includes the sale and the biofuels used throughout the midwest. flex vehicles are being purchased on this code. and they don't have the infrastructure and i would argue that we need to continue to invest in this area and make sure that it is available. and senator peter i would like to see a follow-up about the greenhouse gases because i find it really ironic that public focus has been very much on clean environment and releasing greenhouse emissions and yet what you are proposing is actually a direction that will increase those carbon emissions

by less utilization of these biofuels. maybe you can comment about that. >> you know we do -- we do an underpinning to this program. and as more and more biofuels are in the system especially advanced on a cellular level that is where the real reductions can be. and you know it has to be 50% less than that is where we want the growth to be. and that has been happening, volumes have been increasing over time. but they have been steadily increasing. that includes 33 million gallons

to 206 million gallons in 2016. and that is a substantial increase. not as much as congress anticipated and hope for her. and my point is that in each individual volume rule we do not have, but we know that these greenhouse gases are associated with different targets to drive that growth in a responsible way and we will be seeing reductions in this because every gallon of gasoline that is replaced by this is greenhouse gas emissions. >> i would like to make a point about this. you talk about the proposed 2016 standard for biofuels.

>> this is six times higher than the actual 2014 numbers. they came online in 2014 and one more is slated for the end of this year. those refineries were created before the disruption with the rule. and i think when you look at it since then, guess how many proposals have been online. zero. because we have disrupted this to the lack of timely rulemaking. we need to get back and i think no matter what our view of the wisdom and the situation is if it's a lovely expected to be administered in a way that congress intended.

they say that we can debate the wisdom of the slaughter but it is your job and i think that we can meet the standards of the investors know that they will have access to the market. so it is critically important that we not automatically assume that we will have a crisis on cellulite while fuels. >> i agree and with that as well we have other advances coming in investors are not looking at that in a way that we would hope that they would if they would have this.

and basically this includes producing a fuel that is very low to greenhouse gas emission. we need to understand those volumes and we need to follow the intent of congress. >> let me talk about this with a side of the epa. >> no one can make it in a quantity that is affordable yet and that has been the challenge. and they just went bankrupt this past year and it was a major hit because they were the leading industries and after a decade of

trying to make this technology work they couldn't make it work at a price that people could afford. if it's not close to be market ready and it's the challenge that they have that they have a mandate by 2022 to get to 44% of the ethanol that is used in the united states and no one can seem to crack the code to be able to actually make this an and the way that is actually affordable. there are lots of folks experimenting with this and other great ideas, that is actually not a technology that in some ways i feel like president carter said that they were starting on this research on solar power and by the year 2000, 20% of america's energy will be produced by solar power. the declaration doesn't mean that this will catch up to be there and on the greenhouse gas side of things come in the

challenge that you have is that you are working on a rule on ground-based wholesale and ethanol increases risk. and the epa study has come out and said if we hit these totals, the ozone levels love across america and many areas have been significant. so the challenge that we have is that we are dealing with a balance of how to we get these totals and decrease the amount of gas that we are doing and hippies goes on the standards. two of the three are not going to work because they don't work together at this point. so how far off and i might of that? >> there is a lot in there. >> that includes the challenges

[inaudible] we also hear about other challenges with those fuels and what they have had to challenges getting up and running. and i think that there are many factors there and i agree with you. >> you have this assumption that this will dramatically increase in usage even six months from now. we are trying to figure out the assumptions that went into that because my understanding is that there are enough e-85 vehicles to meet those requirements, but many choose to purchase e-10. i'm trying to figure out how the epa assumes that this would jump when the owners but chose not to

use that product are part of that. >> that's right, you are correct. our information is that there are about 3000 stations in the country that provide this. and there are issues with the pricing of it because the energy value is different than that and i think that people don't understand that and this is and prices need to move in directions that will encourage people to understand but that can be in economical choice for them. i believe that that is a multi-yielding process and we have seen progress there. our proposal here is intended to be forward-looking as well as

optimistic. we understand that congress wanted these fuels to be driven in the market. >> trying to get the methodology. is the assumption that we are going to try to push the issue and there's not a method is that we anticipate the space on purchases or availability that people that have these vehicles will start using this product more? >> we have looked at a variety of things. we know that there are vehicles out there that could be using this that are not doing so now. there's not a precise mathematical formula. >> it's more of an aspirational goal rather than an actual goal. so we anticipate this use? >> i would say it's an optimistic goal that is informed by our judgment and our understanding of the way that the market has developed so far. in our judgment what it can do and the epa has regulated the fuel market for many years.

this has all been laid out for people to agree or disagree with in the proposal and we welcome that. but it was all of those things that went into that. respecting congress' clear intent that the volumes of the fuels are increasing and that it was going to take a push in order for that to happen. our understanding is that congress wanted warm renewable fuels to be used than would be used without this. >> going a little bit further. we have all of these pumps located and most of them are in the upper midwest. and we have those pumps and the infrastructure that is not yet available and you know, again

so many other types of fuels have seen us. it's a great example of that. and it took many years for that to become a cost-effective way of extracting fuel and we have those challenges. we are moving forward in iowa, the greenhouse gas emissions have slowed down tremendously with that product. >> you know when it comes to engines and obviously we have had a great deal of [inaudible]

i think that the jury certainly isn't back on this. >> that's right. >> if you look at it as an analysis with the warranty statements and owners manuals, it reveals that the auto manufacturers approve the use of e-15, which is approved by the epa for all of 2001 and newer vehicles the which really accounts for about 80% of automobiles out there. was this taken into consideration enact how did you take this into consideration? >> i want you to answer that question. i have an appropriations hearing that i have to run to a vote on. i will return.

we have quick appropriations and i will be right back. so hold your own here for a moment. >> thank you. >> e-15 is very promising as a way to get more ethanol into the system. there has been a lot of discussion about the vehicles using it or not using it. there has been relatively little and getting into the system now and i think that there's fewer than 100 stations across the country that are offering this and i think that this is an issue that we all need to be focused on with how we can increase people's views and as more and more new cars come into the system and people understand and are comfortable, but this is something that they can use in their vehicle, that the attitudes will change, that the prices will change and the infrastructure will comment.

>> i think if you look at the chart that the senator showed you, you would see a partnership with state governments basically providing incentives to build up infrastructure and doing the things that we need to do on a state-based level. and i am curious about how much you have heard from people who have filling stations is wheezed call them in the old days. not the major distribution centers but those guys who are now concerned about the quality and regulations of e-15. what is the conversation back and forth between the epa and the actual convenience stores and filling stations? >> they have conveyed to us challenges and wanting to meet the needs of their customers. looking at the costs to install

new infrastructure is as well as uncertainties that they may have about new technology and being able to cover the cost of putting infrastructure and by being able to tell the product. >> do you think you have clear rules on what the requirements are for that infrastructure enact. >> i believe so two a lot of them do not think so. i think that there's a level of uncertainty and as a result i think that they tend to be concerned and maybe think about over building the infrastructure or overbuilding this so that there's no concern at all later on. >> we aren't just talking about winter comes and all of those issues and they have a structure issues. we are also talking about long-term concerns as well. so it would be good to find out what role they play in providing

certainty to the filling stations. as it relates to converting and moving into this. which most vehicles basically are approved for. >> i'm glad to look into that. >> if they do have that choice and are using it it's typically anywhere from a nickel to a dime lower than the e-10. then the impact to our consumer is that there's a savings of five to $7 million per year. and so it's something that i think we need to take a look at and continue to refine. did you have any further information to add? >> yes, as long as we have some time, when the cat is away.

[laughter] you know when we look at the prices. it is so complicated for many people to understand. but the latest proposal talks about the lack of correlation between wind and gas prices as well as the need to have this to drive investment in infrastructure. however, your proposal had the opposite effect. in this market, it even they have said that we will not hit the 10% ones by 2016. so when you guys were plotting this out did you consider the disruption but that would have to the market and what it would mean long-term? also does that inform how you want to deal with this in the future to . >> one statement that you said that everyone can hardly agree

with is that this is incredibly complicated. it's very complex. i have been working on this for two years and i feel like i'm beginning to understand that but i'm not an economist and therefore there is much discussion about this issue that goes on with people with that kind of training and understanding. and it's affected by many things, not just the volume that we set. >> don't you think this was a major driver? >> i would not say that it's not a factor. but the prices of stocks many things that go into this, producing fuel, they have a lot to do this as well.

it is not simple, it is complex. we pay attention to the prices but we don't factor them in the morning to the decision-making. and so basically this program has worked in biofuels are more expensive to produce than gasoline and you need the system that congress set up and it

builds and then people use it. >> yes, i guess that we will have to agree to disagree because i think it was a major factor in what happened and i think that we want to avoid that. we want to avoid people coming back and saying that this disruption has created an additional disruption in the marketplace. and i would like to ask the chairwoman and senator baldwin in his statement for the record. >> yes without objection. >> i could go on all day. >> yes. >> and especially compared to other energy sources here in the united states, we have been in support of those in the race over 100 years.

relatively young developing source of energy as well as cleanburning as well as very supportive of our economy in iowa. even though it wasn't expressly written in the law that leaves domestic sources of fuel, i would encourage that in the future as dumping that we have taken into consideration rather than utilizing some biofuels from other countries as well and that could be on thing that we need to look at in the future. so senator? >> i just have a final comment. >> the fuels industry has been a building block. and a foundational piece that

was developed in fuels. and it's beyond just the fuels market this has an environmental effect on building supply issues in all kinds of issues and this has been an industry that has been very beneficial to the united states of america and to consumers. we want to make sure that when congress has a policy and it states that these are the reasons for the waivers, that the agency follows that policy. as i said, i am sympathetic but in part this was to drive the

infrastructure. when you retreat from the numbers, it has the opposite effect and adjust create a spiral to a place that we don't want to be because that would not be a place that would be consistent. so i look forward to working with you as well as talking about what the future holds. i look forward to hearing the outcome of the hearing that you will have in kansas city because i know there will be robust and you're probably getting many comments already. hopefully we can look at some of the issues that we think are possible there could be more consistent. especially in adjusting the rules and i would ask you particularly to check that out in the biodiesel area. >> okay just on the way back.

kind of in some of my conclusions, i think that we need to get this volume set and i think that we need to take a close look at what we are doing in right now commodity prices are extremely low. and you know so i would encourage a good hard look at that and again, i look forward to working with you, if you would empathize to the epa administrator that we would love to have her in iowa to show her the process from the time that that goes into the ground as a seed and then putting it out to consumers. at this point we are going to

recess for a few minutes and we are senator to conclude. ..ens. i don't care what other countries think about whether it's going to hurt us. it's hurting the people. >> returning back from recess. i apologize for the delay. you'll be glad to know we're voting and working through the interior appropriations, which epa has a little connection to as well. so i apologize for that back and forth. when i stepped out, the ongoing conversation w on

when i stepped out the i stepped out the ongoing conversation was on e15. i would've appreciated that in the dialogue as well. you and i have had this conversation. epa believes that since 2001 forward manufactures on the whole do not. manufactures are allowing e15 to be within their warranty. they do not believe e15 fulfills. do you want to characterize the number that has been an issue for some manufacturers? >> it walks through that in details each and every manufacturer and any model at all. it's only been within the past year and a half that the

majority has been above 15% for the majority of the manufactures of any vehicle at all. it really means your increasing new 15 on e15. my vehicle is 12 years old that i drive. so the challenges increasing numbers of the e85 in the consumption there that we will have this large increase on e85 and there will be a jump on e15 use. there is a limited number of locations to get it at this point. i'm still going back to the assumption and in pattern here. i could talk about viability and energy use but it's a pattern of how do we discern what's coming in epa and the method of making the decision? >> we did not actually assume any e15 in these proposals. for the reasons that you cite

and quite a few conversations that discussed it. >> will it. >> will talk about the biodiesel and the same thing. that product has consistently exceeded what has been manufactured. when we have the method of what were counting on the small percentage of biodiesel fuel that cannot handle lower temperatures. i believe there is a 56 degrees and down that it starts turning into a solid so that doesn't work for the biodiesel. the question is, how did you do that estimate? what was the method of that? what are the expectations? it is not an open amount, the epa can set the amount based on what they feel amount based on what they feel like his best information. how are you trying to split the to their to save this part can be used in el paso texas and southern arizona but everywhere else it won't be used year-round.

>> so as you know we look at these things from a national perspective and we looked at the increase in the amount of biodiesel that is used. i think i would say, senator we used. i think i would say, senator we would be glad to follow up and consent from this with you with more detail. with the volume we are proposing here we are not in danger of exceeding the amount the system could absorb. will not get into any sort of performance problems. >> so the assumption of the growth of the specific line of products is not the line of biodiesel that has a difficult time with lower temperatures. you are assuming the growth and the information leading to say is that the growth is in the part that does not have a difficult time with the lower temps. >> i don't think it's different fuel is it? >> there's one that uses animal by parts and that type if it

goes below 56 degrees does not work well. you have to use it in warmer climates where you are never going to get below that average. there are many parts of the country that do so you'll run into problems with that. let me ask you about the reporting period if it was repealed or if it's future mandates were previously performed proposed 2014 numbers corn -based ethanol would remain at about $14 billion. it's a viable fuel consumers want to purchase it. they estimated if the mandate went away we would still stay at about 13 billion gallons of corn-based ethanol even without the mandates. when you're looking for the push there they're actually trying to push some of the products into other places of the market is not requesting.

you said the congressional mandate is to be able to push this out into other areas. the challenge is, of the 13 billion that they are estimating that the market requested and wants do you use that just as a baseline? is that a number you use as a baseline in your estimation? what if the mandate went away? the 13 billion would still be there? is that sort of a baseline number question mark. >> that number is reflective of the 10% amount that ethanol now fills in gasoline. i think we don't set a standard for ethanol in the rule. ethanol fills in because it's considered conventional. we know where the blender wall is likely to be depending on how much fuel is actually used and

so we take that into account, and as you reflected we understand the intent of congress was to push more into the system than what e10 accommodates on its own so we built from that. >> so the issue is interesting and again it's not your study, but in 2014, when they studied it the mandate went away on corn -based ethanol, their study said 13 billion gallons would continue to be used. it's in the system its built-in and people like to use it. they also said those 13 billion gallons will be continued to use and the price that consumers pay for gasoline would continue to go down. i cut that was an interesting study to look at. there's a lot of push and pull right now and i know that's not what this hearing is about but i wanted to remind folks that the people that do the scorekeeping around here reminded us that corn -based ethanol works in the market without the mandate and prices

would decrease if we removed this mandate. we started talking about the i know you have to balance both of these. how are we doing balancing this in the internal conversations with what happens to ozone levels and how ethanol does increase ozone levels in the coming standard the study of the ozone standard is a decision that they need to make. what the ozone standard is about is they determine 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, statute, and this has been confirmed by this supreme court. that decision is not to be influenced by implementation issues that dealt with and other parts of the clean air act

and state and industry and the epa for many many years. so, we do our job under the part of the clean air act that we set the standard so american people know what is the right level of ozone to have in the air. we then work with the state and others on assessing where across the country those levels monitored in the ozone levels exceed that standard. that is not everywhere in the country, not by a longshot. once you identify those areas, you look to see if the admissions 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 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 were ozone levels are healthy are ready and meet the standard. it will be a situation that we will look at place by place to determine what needs to be done in order to be sure americans have healthy air to breathe. >> so were still on the same challenge and that's we have a mandate to use more ethanol and a coming mandate to decrease the ozone. does those two are going to be in competition with each other. we will have communities i have an increased demand for ethanol but then have to find ways to use more public transportation or decrease their lawn more usage or major industrial complexes will have to relocate based on one mandate competing with another.

i know this has to be an ongoing conversation when literally communicate these have to say you're telling us to do this but then telling us we have to change our stuff when this rule is actually part of the issue. >> yes but it's really question of any given area, what is contributing area, what is contributing to those high ozone levels. i don't think it's fair to conclude right now that there are areas that will be significantly affected by increased exclusively with ethanol use as we look at areas that might not meet a future ozone standard if there is one. >> we will have locations that will be .2 outside the range and that point to could you will be ethanol base. it could be part of it. the numbers are so close in this. if it was a big gap, i would understand that, but it's not in these locations, it's very, very close.

ethanol will be one of those contributing factors to it. this is just a large conflict for these communities and i want to know i want to know how the epa will address it. we don't have to solve it. there will there will be a different committee and different legislation for that but i'm curious about the process that will solve that. >> i do understand and i very much appreciate your point. the history of states and epa working together to reduce ozone levels have been defined as the most cost-effective ways to reduce the precursors to ozone in areas where ozone levels are high. that is the process that would ensue if a standard is changed. there are lots of things that contribute to ozone containment in areas that have that problem. >> if they are .2 outside of the

ozone level would one of the options be they don't have to use as much ethanol in that region? >> that would be a very difficult decision based on the mandates that we have. >> that's why bring it up because you have competing mandates and i want to know the process by which to make this decision. if they're gonna have ten things on the table and if a decreased use of ethanol in their areas not an option, when we know that's the leading factor, why couldn't that be on the table as well? now you have two competing mandates. >> i think that's a good question, senator. >> will have to resolve that and i would like that to be in the set of options that a community could have to make a set of decisions. rather than a hit on several industrial areas when we

know also the ethanol use is one of the factors. we'd like to have the flexibility to make that decision. >> fuel use has always been an issue in considering how to meet ozone standards. the agency in the states the agency and the states have balanced the various requirements that congress has laid out on fuel use. against other options that they have. it will be an ongoing conversation and i take your point. >> the other i take your point. >> the other issue deals with foreign importation of some of the fuels that are coming in. senator and sprouted up before and other senators. it is a question that several folks have about biodiesel and in other areas. if this was about protecting the environment and the american energy options, that is the intent that was clear in the statutes as well how does that affect the actual amounts in the target. if the target is going to be set by one third of it and will be filled by foreign for is that for domestically produced or all of the used?

>> as. >> as we understand it is for all of the use. >> could that be fulfilled with entirely foreign-based fuels? we had a competitive group that was able to produce it cheaper overseas and bring it in could the entire requirement be produced overseas? >> i think it's highly unlikely. >> probably unlikely, yes. but it doesn't matter whether it's foreign or domestic on that, either one. it's just setting the number that, either one. it's just setting the number of what were going to use. >> yes what were going to use in this country. >> that will be an ongoing issue that we will have to deal with in the days of had. the clear main mandate of this is how we provide our own energy independence. if we can't do that were simply in pointing it, what's the difference of in porting oil or sugar cane. importing is importing at that point and were not energy independent.

what other comments you have for me? for this planning and the timeframe you have not had the opportunity to talk about yet? >> i appreciate the opportunity to 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 there will be a lot of discussion in the months of had when people are getting their comments and to us and i just want to assure you 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 in the way congress intended and 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 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 we have both ambitious and responsible efforts to implement the renewable fuel standard. that is my commitment to you. >> thank you for that. the days ahead we will have an ongoing conversation at the reset. that time. and some predictability there even to know when it's going to start and when people can start to give comments and what the assumptions will be in the conversation because the reset is coming and it's coming extremely quickly. 2022 is both near and far. 2017 is not very far away at all. the parameters for that will be set by november 2016 so were 2016 so were very close and will be in the middle of the ongoing conversation for that. i know we have to maintain a very public conversation but also a clear conversation about

when the roles will be set to get us back on schedule. if her back on schedule of november of next year, all the rules change suddenly again for that november 2016 and i'm concerned that will rollover as well in the days ahead. before we adjourned, i would like to announce on july 16 the subcommittee will here hold a hearing. this does conclude today's hearing and this does conclude today's hearing and i would like to thank you for your testimony both written and oral testimony and for the brief recess we had to in door. the record will remain open for a few days until july the sixth and other questions for the record. this hearing is adjourned.

coming up tonight on c-span two, paul ryan with his corporate tax two, paul ryan with his corporate tax reform. then we hear from budget director sean donovan on the upcoming discussion on the debt ceiling. joint chiefs of staff testify about u.s. efforts to combat isis and u.s. policy in the middle east. >> on the next "washington journal", the implications of the church suit shooting in

charleston south carolina. we will also take your facebook comments tweets and phone calls. there is there's a dedicated line for charleston residents. "washington journal" live every morning on c-span. the american conservative union hosted a discussion on friday on the and ron nuclear negotiation. it's live at 1130 eastern on c-span. on c-span saturday night at ace eastern, supreme court justice ruth and a movie about her life and career. sunday night at 635 profile interview with candidate ted

cruz. on book tv at 10:00 a.m. eastern we are live for the annual roosevelt reading festival. molly on how books help the morale of our military in world war ii. on sunday night at nine, on afterwards, they discussed the need of a sexual revolution in the meat middle east. this weekend on american history tv on c-span three were live from the gettysburg civil war on the end and aftermath. the university of california the university on general grant and at 11 with an author of abraham lincoln. we cover are live coverage

discusses the consequences of the civil war. later war. later at 11 the discussion about treason and loyalty during the civil war with penn state university professor william blair. to get our complete schedule at c-span.org the wall street journal hosted its annual meeting regarding financial issues fully facing the global economy. next they talk about corporate tax reform. this is 30 minutes. >> it's the base erosion and prophet shifting project. it hasn't had a lot of attention out there in the world but it seems to be a really big deal. we talk a little bit about what was in the letter and how you see that in terms of your own efforts to work on the tax code

here. >> it certainly has the attention of tax writers, i can tell you that. first to first of all we believe in seeing countries compete for lower market barriers, free enterprise and not increase taxes up. >> which is exactly what this project is attempting to do. >> corrected is attempting to grab a tax base that we want make sure our treasury has united front against the best direction and the best project. that was the intention of us standing up and speaking with one voice on that. the other issue is we do believe it brings attention to having to deal with these tax base issues in such a way that we give america a place where it is a haven for capital formation. they call it stateless formation or highly mobile ip income. we want to make sure america is a

place that makes sense to keep those decisions here and base those operations here because of our favorable tax cretins. those are the things we talk about what we talk about international tax reform as a component of tax reform. >> one of the business threat of u.s. businesses of where they're heading with this rule? >> the biggest threat as you will have a system where there is no haven for lower tax breaks and that we have other countries trying to assert their jurisdiction into our domestic firms to tax them. when we break down these traditionally observed them. when we break down these traditionally observed international barriers between firms and between countries. there seems to be other things like disclosure requirements in this which you mentioned in the leather. >> we are very can learn about ip protection and data protection. were concerned about the privacy of firms. again, i firms. again, i think people get into this conversation about tax

reform, we want to acknowledge the fact that it's probably in our interest to see if we can move quickly to do some international reforms that address this issue so as to cauterize it in a way to prevent the corporate a way to prevent the corporate tax base to be eroded so we have a tax base to work with when we do comprehensive tax reform. >> do you think that is widely understood in the congress? >> not really. it's the people who are involved that understand. i think they know we have a terrible tax sent system it locks money up overseas, it's also takeovers of foreign companies buying u.s. companies because of the superior tax policy that other country have. members of congress are on an increasing basis, seeing this as a sense of urgency. i do think this issue is percolating.

>> to think they have the authority to sign on to this question mark. >> no. >> and you told them that. you think the obama administration agrees with that? >> that's something i had a decent amount of conversation with i had a decent amount of conversation with treasury. i think they agree with our view of things more than that. but not in every instance. we just want to make sure that the legislative branch is the branch that writes the laws are nothing more than that. >> you just discussed the issue of the corporate tax base. how much does that add to the issue. we might be heading into a direction where we do not have a a base available. >> if it erodes so much because of all of these international rules, or because our absolutely inferior tax system, we won't have it take tax base with which

to reform our tax code. that's very important. for those of us who want comprehensive tax reform we think it is important to stabilize our tax base we can get to that day. can we do that with this president? there is there's a big difference between our view and the presence view. he believes we have higher tax rates on individuals. we believe individuals. we believe it should be lower. when eight out of ten businesses are pass-throughs, l llcs, so proprietors, they are affected by this because it's 46.6%. overseas which means lake superior, the canadians are at 15%. the international average tax rate on businesses is 25%. we have to get these rates down across the board. that is something the administration doesn't share with us. there is an impasse that is impassable. >> there is no comprehensive taxes. that's just off the table. >> that's just not gonna happen

when we can't get to the place we need to be to get a truly reformed tax system. the question is, what can we do in the meantime that gets us a step in the right direction? >> let's let's say there's 12 things that need to be done can we get two or three of them done? were looking at that, were looking at the international system. they want to move to an exemption system and we want to make every day reparation day for firms. one of the systems we have, so the way the will we look at this is can we set up something that we know is going to be up permanent feature of a new system helps protect tax base and helps get american firms in a competitive footing in the global economy. >> having mentioned that you can't get comprehensive reform reform, this does get complicated given all the things you said about pass-throughs et cetera so what can you do that gets you a step in the right deal? what are those prospects.

>> a lot of these rc. we like to think this is something that's in the cards, meaning possible. this applies to both sides of the code that has to get done and we believe many of these provisions ought to be made permanent. we think that is in the right direction for tax reform. >> some will grandfather on and some will be permanent. action 179, expensing things that's an example. then we have to figure out how we can get in the right direction. there's a lot of talk about an innovation box as a way for having lower tax rates to get that income stay here and making our system more competitive if only on an incremental basis towards getting comprehensive later on. we see there could be one big

step in 2017 or two steps, one 2017 or two steps, one now which we can bite off what we can chew and get done and make us competitive and then the rest of it done in 2017. >> what 2017. >> what are some of the ones i should go away? >> i'm not going to get into that. >> oh come on. >> no it doesn't help to getting to the goal of comprehensive tax reform to do this on an anecdotal basis outside of showing what the new system were trying to get to. were truck we asked everybody who cares about this to understand that our goal is a better tax system for america and more probe growth system with lower tax rate that make us more competitive globally. in globally. in the context of that, consider the end result. when we go to this anecdotal tit for tat yes to this, no to that without showing the comprehensive version, it's counterproductive to getting it done. >> how do you reassure companies that you get to that angolan that it