. >> and federal management examine the environmental protection agencies renewable fuel standard this morning. the agency develops regulation requiring the transportation fuel that's sold in the u.s. contain a minimal volume of renewable fuel. we're expected to hear from janet mccabe. oklahoma senator james lankford is chair of the hearing. looks like it could be a couple of minutes before it underway. we will have live coverage when it starts here on c-span3.

good morning. i want to welcome everyone on today's subcommittee hearing. i look forward to another important discussion regarding the renewable fuel standard and its management. since 2005 daily domestic royal production has nearly doubled. meanwhile other government regulations such as fuel economy standards combined with the

recession led to lower demand that anticipated. the increased use of natural gas as lowered the greenhouse emissions. statutorily the epa is required to release the mandated volume by november 30th of the previous year. the epa has not met this deadline since 2009 and we're still waiting epa for the final version of the 2014 volumes even though the year in question has been over for six months. when the announcement was made in november of last year that we would not see a final rule until the calendar was over, the agent cited significant controversy as the reason. seemingly this program is unworkable in its current form and there's a tremendous amount of controversy around it and a lot of opinions and emotions around this particular issue. on june 1st 2015, the proposed mandates for 2014, '15 and '16

were all released together. we need to take a sere i didn't say look at whether the delays are unavoidable every year now under current laup. the prosed requirements include increased unattainable at times levels of renewables and those quotas for the gasoline supply over the next year and a half. pea chose to work from the actual used volumes for 2014 but the future mandates called for by the proposed rule represent an aspirational goal with very little time for increased consumer use of vehicles. the likelihood that the advanced fuel will have to be reset by the rks perks a starting next year increases regulatory uncertain uncertainty uncertainty. when the rfs was last modified.

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 are worth the risk of the increased food and striermt. the additional cost to restaurant owners and the everyday americans who live with higher grocery bills. beyond real concerns over engine damage there have been additional cost to motorists at the pump. on the environmental front, new studies are highlighting the program's impact on the land and ozone. today we have the opportunity to review the epa's management. i am pleased that january met mccabe could join us. thank you for being here again. i look forward to reexamining these issues with my cleggs today.

i recognize the ranking member kmr opening statement. >> i want to start by first saying i wish we weren't having this hearing today. i wish there was no question over the management of the rfs or the environmental protection agent sit's ability to implement the rfs as congress intend pd. but we're in a place where epa created uncertainly to our biofuels producers from corn ethenol to biodiesel to ethenol producers producers. in is costing us environmentally and costing us jobs. i'm a strong supporter of throughly all of the above energy policy security along with senator lankford. my state is one of the leading producers, although we're number two. i don't know where oklahoma is on that rank. north dakota is number two in the production of oil. and we have a lot of associated gas. we have a lot 0 wind resource

and we certainly have a lot of bioresource. and so this is a huge issue to my state. and i can tell you that i think all of the above the rfs is part of that policy. when we look at what rfs means to my state of north dakota alone, this industry represents $2.5 billion in annual economic output, almost 9,000 jobs in oklahoma. the rfs helped create about 4300 jobs in wisconsin, $4.2 million in economic output with over 19,000 jobs. and in iowa, a major ethenol and biofuels producer $19.3 billion with almost 74,000 jobs in the mix. and so i think i could go on. i think these numbers are critical to highlight. it's important that it been

administered correctly as congress intended. i'm glad the epa finally reduced the proposed numbers if 2014. obviously late. i don't think anyone can say we're seeing those numbers in '15 where there's faye faulty to the rule. '14 rules were not timely. i don't think there's any doubt about it and that has created a great amount of disruption. but i do want to take and praise this important first step. u and i want to thank ms. mccabe for her leadership in making that happen. the proposal continues to ignore con depression intent and volumes citing availability of distrux capacity. the statute only allows for an incad kwat supply waiver for and not a distribution capacity waiver np in 2005 the house included a waiver for distribution capacity but the final bill passed by the house

and senate did not. so i mope when the epa puts out its final rule in september they'll toss out the flawed reasoning and return the management of the program to the way congress actually intended. if they do the that the program will work just fine. i think certainly need to be our top concern when it comes to federal regulation, legislation or anything else we do here in washington and certainly on this committee we spend a lot of time talking about predictability and certainty as essential component 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 when those volumes may be waived. the best way to get back on track and provide certainty i think is to follow the very clear congressional mandates.

because the uncertainty has real consequences, i mentioned earlier the contribution rfs has made to our states. well when managed out of line with congressional intent there are negative consequences. in fact the advanced biofuel 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% of u.s. biofuel producers scaled back production and almost it's ld production. i know this as a certainty because our north dakota plant stalled production of biodiesel in the first part of 2015. however i must emphasize this is not a problem with the rfs but rather a problem with the administration of the rfs. epa's failure to issue rfs rules

in a timely manner that is consistent with the law should not be misconstrued as ooh sign that the program is broken. up until 2013 the program worked as intended to spur innovation and growth in the advanced biofuel space. i look forward to hearing from ms. mccabe of epa's past successes and how they can get back to the past successes. i would say i think i'm 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 if any way adjust the rfs but what we can do to make this program administered in a way that provides certainty. thank you, ms. mccabe, for showing up and thank you, mr. chairman, for the opportunity to offer a statement. >> at this time we'll proceed from testimony from our witness janet mccabe, the office of air and radiation. reproefs yously serve as the principle deputy to the

assistant administrator. it's good to be able to see you again. in tradition of the subcommittee we swear in all witnesses that appear before us. if you don't mind, i'd like to ask you to stand and raise your right hand. do you swear the testimony you're about to give before the subcommittee will be the truth, the whole truth and nothing but the truth so help you god. >> i do. >> you may be seated. let the record reflect that the witness answered in the affirmative. we'll be using a timing in this case but you're the only witness in this case 37 we would like for you to stay as close as you can to the five-minute time limit. you're welcome to build on it or be able to reinforce that or talk about a totally different thing as well and then we'll have some question time as we have zun in the past in this subcommittee and you and i have done in the house. the first round will be set questions at five-minutes each after that it will be open dialogue where we'll have interchange here as well as with you and be a more open conversation.

be able to receive your testimony now >> thank you chairman lankford, ranking member and other members of the subcommittee. morning. i appreciate the opportunity to testify on the renewable fuel standard program and epa's recent vool youm roos proposal. the cleaner act requires epa to establish standards. total advanced, biomass diesel. on may 29th within epa issued a proposal that would issue the standard for 2014 through 2016 and the volume of biomass space deesz l for 2017. we'll finalize the standards by november 30th at which point we will have returned to the statutory time line. the epa recognizes that the delay in issuing the standard frp 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 the low carbon fuels to further develop. congress set annual standards that increase every year. it ams included in the law tools known as the waiver provisions for epa to use in the event that it determined that the volumes could not be met. our recently issued proposal seek to ensure that the growth of renewable fuel production continues. it uses our waiver authority in a judicious manner to establish ambitious but responsible and achievable standards. the proposal addresses three years worth of standards and would set the roll yum requirement for biomass space diesel for a fourth year. for 2013 we're proposal stand dads at the level that that represent the actual amount. for 2015 and for 2016 and 2017 were the proposed standards would provide for steady increase over time. the proposed volumes reflect or

conversation of two factors. first that the market can respond to ak bishs volume targets and second there are limits today to the amount of volumes that can be supplied to consumers. the zedly increases volumes that we proposed mean that biofuels will remain an important part to the overall strategy to address climate change. we're optimistic about the future and think the proposal will put it on a pathway for steady growth for the years to come as congress intended. many stakeholders want to know what the volume targets established in the statute cannot be reached. several reasons. slower than expected development of the biofuel industry and the resulting shortfall in the biofuel supply. a decline in gasoline consumption rather than the growth projected in 2007 and constraints in supplying surgeon biofuels to consumers. ethenol at greater than 10% of

gasoline in particular. if gasoline demand continues on average to trend downward or remain flat, increasing the amount of ethenol used in the fuel pool will require significant any greater use of gasoline blends with higher ethenol content. epa has taken steps to pave the way for increased use of higher level ethenol blends including granting partial waivers for the use of e 15 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 increased use of these fuels including current near term limits on fueling infrastructure. our proposal aims to balance two dynamics, congress's clear intent to increased use of renewable fuels over time to address climate change and real world circumstances such as the e 10 blend wall that have slowed progress. thus we're proposal standards

that will drive growth and renewable fuels at an ambitious but responsible rate. for 2016 we're proposing number to incentivize real growth. we propose to set total renewable fuels at 9% higher, advanced biofuel 27% higher than the 2014 volumes. we believe that these proposed volumes are achievable and consist ent with congress's 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 program. we're improved the quality, transparency and efficiency of our process for new biofuel pathways. and it's important to remember that the program is only one part of the overall picture for biofuels. both usda and d.o.e. have programs looking at ways to support bio fuels and bio fuel

in infrastructure. we look forward to hearing from all stakeholders during the public comment period ending july 27th. we intend to finalize the rule by november 30th 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. >> thank you. >> naipg you, mr. chair thank you ranking member for this wonderful discussion that we'll be having this morning. i appreciate the opportunity and maing you ms. mccabe for joining us today. i would like to start off by saying thanks so much. we do know you're working very hard in that area so i appreciate that. i appreciate your testimony and i believe personally that this is not only an economic issue

but also a national security issue as well. this committee does have a history of working together across the aisle 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 mind. and oef 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 ethenol and 230 million gallons of biodiesel. we're also home to two state-of-the-art ethenol facilities with another coming into production later this year. additionally we boast retailers across the state that offer affordable ethenol 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 eps prksepa is now using the lack of infrastructure as an excuse for setting bio fuels levels lowen than originally mandated. this suh 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 jeannie mccarthey to visit ie whoa and see the impact of the delay release of the rfs volumes.

additionally last week the entire iowa delegation, republican and 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? >> thank you, senator. i can't speak for the administrator's schedule but i can certainly take back to her that you raised this morning and her office can respond. >> thank you? >> terms of the hearing, as i mentioned, we eesh holding a public hearing in kansas city, kansas. we have a regional office there. there's great interest in this issue across the country and it's always a challenge for us to choose the location of the limited number of hearings that we're 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. and we have as of yesterday i think we had 250 people signed up including a number of people from ieowaiowa. we'll look forward to a robust attendance there. >> please emphasize to her 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. if we can move on to infrastructure and congressional intent. in your testimony you cite lack of viability refueling infrastructure as justification were not setting the rvos higher. however when congress passed the rfs in 2005 want only two types of waivers, waiver authorities were included. and that was lack of supply and

veer economic harm. that conference committee rejected available refueling infrastructure which would have severely limited consumer choice. 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? >> sure. i'd be happy to discuss this. 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're looking at here is the one that says

inadequate domestic supply. and i understand that there are some activity -- 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 often the case it's epa's job to reasonably interpret congressional language in implementing the statute. we lay this out at some length in our proposal and i'd be happy to share that with you if you haven't seen it. but the bottom line senator is our interpretation of that term is that congress intended for the fuels not only to be produced but to be used. that is where the value in greenhouse gas reduction and diverse energy supply and consumer choice comes. and so when you have a situation

where the fuels cannot in fact be delivered to consumers on the time frame that was set out in the statute and congress provided this waiver authority we believe it's a reasonable interpretation for us to reduce the volumes to a level that still will comply with congress's intent to drive the fuels. this is a -- this was a big thing that congress did in the rfs. it was calling for big and significant change. and the program stephretches 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 project forward, to set the standards at the statutory volumes would not be appropriate. there's too far a way to go.

so the favor provision is there for epa to use in its considered judgment to set ambitious but responsible levels. >> i thank you. i know my time has expired. i would argue that we're caught in a very vicious cycle with the producers not knowing what that volume will be. so we actually delayed production and research and the furthering of those types of fuels. so without the standards being set, we don't know where to go. i just continue to state we need reliable energy sources for all of our consumers. we would like them to make that choice. thank you very much, mr. chair. thank you. >> thank you, mr. chairman. ms. mccabe thank you for being here. i have a series of questions that will follow-up because it feels to me when you hear from the epa about corn production volumes and the deg of agriculture are quite different.

there's a lot of discussion in your review. as the epa considered the proposed rule for the rvo standards, did you use any studies or metrics to model how it would affect the prices? >> the way that the rule or the program affects transportation prices is very, very complicated complicated. and we did not attempt to estimate the impacts on transportation fuel prices. >> okay. so no studies or models on transportation fuel prices that yaw eve used? >> we certainly look at all of those but we ourselves did not try to estimate what the impacts would be. >> would it be possible for us to get a list of the studies and the models that you consulted? >> sure. >> we'll follow up. thank you. in your proposed rule did you conduct any studies to model how the proposed rule would affect

international trade? >> 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 didn't do that ourselves. >> so when you're evaluating the proposed rule, when you're deciding what you're going to promulgate, are those studies and what you consulted, we could have access to? >> sure. anything that we looked at you certainly can look at it yourself. >> great. thank you. in your testimony -- and this is again picking up on some of what senator ernest was arguing you say we have a door we need to repair. you say the epa will continue to engage stakeholders and work with the d.o.e. it released its quadrennial

review and said they would continue to do the activities to develop reviews. the report states that the department of energy would be providing technical support to the states, communities and private entities wishes to invest in infrastructure to dispense higher level ethenol blends. the usda has crop projection reports on corn that state that the amount of corn used in calendar year 2013 is estimated to be 14.2 billion bushels, an average yield are estimated to be at a record high 171 bushels per acre. the usda is saying there's plenty of corn and the department of energy is saying we need for research. i think when you listen to corn growers in my state, they're skeptical of 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. so i wonder if you see their skepticism and if you can explain to them that it's believable that you're listening to the other agencies. >> indeed we do. we work closely with the u.s. and d.o.e. i have been involved with many conversations with staff and leaders from those agencies as we work on this and other issues. there is very much a commitment across the administration to work to implement the rfs and promote the development and use of renewable fuels. it's hard to convince people who might have a different few, but i think that our proposal reflects the fact that we consult with those agencies. and we're not agricultural economists. we don't try to be.

that's their job to do. we certainly must work with them and we do. >> just feels to a lot of people who are trying to make production decisions that it's hard to reconcile the different agents' views of the future of the corn crop. i'm a co-sponsor of s 1239 which is a bill introduced by senators donnelly, grassly anfisher that expands waivers of the pressure limitations that make it harder for e 15 to be used in the summer driving season. i have some questions for you related to the problem that try to solve. some of these may be technical enough that we'll need to do it for the record. the state of nebraska is able to provide us a breakdown of the number of ables who areutomobiles. in light of your concerns, 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 e 15

and in particular how many can use flex fuel and would you be able to elaborate more on the breakdown by fleet and the amount of vehicles that can support each category of fuel? >> we do have number to answer those questions. i don't have them with me. glad to provide them. >> senator peters. >> thank you plmplt chairman. >> thank you ms. mccabe for your epa's hard work and your work in ad minute straiting 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'm always looking for way to diversify the u.s. vehicle fuel supply and making our nation more energy independent and improving the environment. and the rfs i believe has been a proven program that is driving forward alternative fuels in economic development creating new clean energy jobs and strengthening the agricultural markets. while i appreciate the effort that the epa set the targets

while also trying to balance achievable standards, i believe that these targets that you have don't really reflect congress's goals for the rfa. the intent was to set ambitious and aggressive targets to spur innovation in biofuels technology and invest in infrastructure to bring the biofuels to market. in order to accomplish these goals, i believe we have to stay the course and keep the rfs intkt. epa's latest proposal is an improvement over the 2013 proposal. but the proposed requirements for the next few years have consequences for our economic, the energy security and for the environment. the epa's delays in rule making over the last 2000 years as chilled necessary investment in advanced biofuels just as they've reached commercial development. the latest proposal cites lack

of supply. blending and destruction 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 clearly what we think is clearly defined waiver authority. in relation to the infrastructure nfment it's clear that the proposal will depress the prices and eliminate incentives that exist today for infrastructure investment. this is troubling. before the rule infrastructure investment was rising and now it's stalled. what is twrur plan to get infrastructure nfmentes made if this proposed rule is finalized without any changes. >> we think there are a number of things that will happen. as you yourself cited, the certainty of having the roll yums out there is absolutely critical for people to know what's coming. and i think that this proposal signals an intent of the administration and the epa to

steady grow volumes over time and that certainty is very important. the u.s. s the usda is committed to inprove infrastructure, recently 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're doing in order to streamline the pathway approval process so we can get the 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 realizes that more fuel more choice will attract consumer 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 with the -- while the importance of certainty before we had certainty. i think the biotech industry organization revealede recent research found that $13.7 billion in investment in advanced biofuels was lost during the one year. does that sound accurate to you and isn't that a big concern? >> i really couldn't speak to the number, senator. but we're absolutely concern about what the lack of certainty has created. that's why we're getting this program back on schedule. >> well, do you see the amount of renewable fuels blended in the fuel supply increases in future years beyond 2016 aband if so how do you see that playing out past 2016? ? >> i do see it continuing to grow. as senator ernest acknowledged,

there's now much more than there was and we see growth and 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. >> were greenhouse gas submissions considered as the agency prepared your role in 2014 and if so what were the results? >> greenhouse gas e moigs missions are fundamental. when we set up the program in our 2010 rule, we did an evaluation of greenhouse gases. for the annual fuel volumes we

don't do an independent relook at greenhouse gas emissions. >> this is a critical industry, industry in any state as well as the other states here and it's a critical part of energy independence for our country and with agriculture in particular. we have a special connection given the fact that i represent michigan which is the center we like to be is the center of the auto auto industry as well. i look forward to working with you. >> ms. mccabe i appreciate you being here and this on going conversation. let me walk through history. we're looking at how to resolve this in the future. 2010 final rule for the rfs was four months late. in 2011 -- it was a good year. only two weeks late. 2012, one and a half months late. 2013, nine months late. 2014, 18 months late and counting. 2015, six months late and

counting. now the challenge is once we get into '16, '17, '18 and keep going, how does this get better and how does rfs get back on schedule that it's ready fi by november or has congress put a requirement on epa that it cannot fulfill in is there something systematically in the structure that year after year it cannot meet the requirement? >> that's a 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 the significant delays. and i'm an optimistic person. my job is to implement this program and meet our statutory obligations in terms of time frames. so i'm confident that we'll do that. and i'm confident for a couple of reasons. one is through this rule making this year we will get ourselves

back on track. we have -- 2014 was something -- was a significant year because of the impacts of the ethenol -- the e 10 blend wall, which was a significant blend issue that people engaged in very very 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 of the conversations that we had with people. and our proposal, our current proposal reflect as 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 e 10 blend wall. and the approach that we've taken now, which as it lays out three years can show the epa's thinking over that three-year period of time is reflective of

the fact that we -- of course we haven't 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. we are -- our staff of technical folks working on the rfs program are working on it all of the time. so it's not that we, we -- >> i don't think there's anyone that believes you're not working on it. it's the method and the timing on it. let's say '14 '15 '16 are all finalized november 30th. so we have that out. then come november of 2016, now we're in reset time. i would assume you would agree there's in chance we're going to hit the targets for 2017 based on statute what is required. that will require reset.

we're not going to be 50%. with the assumption as well the way the statute is written corn based ethenol continue to decrease as required in if statute. i mean if there's a clear aspect of the law, that's clear from the law. that's also not possible based on production. so you're in a very odd quandary come november of 2016 trying to promulgate 2017. where i'm coming from is great it looks like we're going to announce 2016 on time. 2017 is coming. how do we avoid that? >> a couple of things. you mentioned the reset requirements and the statute lays out circumstances under which we consider a reset which is a significant undertaking because it is for multiple years into the future. >> would you agree that we're going to decrease that number by 50%. >> yes. >> okay. >> i would agree.

and depending on how these volumes turn out, we may hit the reset trigger for the other volumes as well. we actually think this 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 also recognize that we have an ongoing obligation to set the annual volumes. so we will be looking to plan or work so that we can accommodate setting annual volumes while also proceeding to consider resetting if we trigger the reset for the volumes. >> let's talk about how you get comment and conversation going on a reset. because setting the proposed volumes, that is one methodology that there's some conversation on right now. and then you'll finalize that rule by november 30th of this year. then we've got 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 based on the annual? will they be combined? i assumy ear creating a method on how to do reset in case that have to be done again on 2018 or 2019. so two different processes or one process. >> i think it's leekly that a reset process would take longer than the one year required for the annual volumes. while this is not firmly decided, my expectation is that it would likery 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. >> so would the recess process starts before 2016 begins? obviously you've got to promulgate the annual amount for 2017 by 2016 if the reset takes longer. because it will be very

contentious contentious. there are a lot of players interested in this. i come back to there's a lot of conversation about corn based ethenol but the mandate in the statute is it decreases. and we've got to be able to figure out how does that work when one doesn't exist in near the quantities as needed. so as that reset comes through, when do you anticipate that's going to go out for comment and will start? >> so our highest priority right now is to make sure that we get the 2016, '15 and '16 volumes out. that doesn't mean we don't have our staff already thinking about the kinds of things they need to be thinking about for the reset. >> i understand. >> i don't have a schedule for you on that reset rule making. 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. >> 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're very good at planning on

some of these things and trying to back up if we're going to have it ready by here, we have to have it here. you can plan all that stuff out. that means we have to have a draft proposal here and proposed rule making here. we need to know that agenda. and so if i give you a month in time period can you come back to us with a reset time frame at least on what the major call ren car events will be on a reset? is that a reasonable amount of time to give us the calendar? you're not going to have to tell us what the reset is but when the major decision points will be and when notice and comment will come out? >> i'll be happy to go back and talk to folks on how much clarity we can give you that, senator. >> if we can come back in a month and get the schedule and give you enough time to lay that out, that would be helpful to us. >> thank you mr. chairman. first off, i don't think we know what volumes of cell lotic

ethenol can be produced because we haven't given the market certainty. so we've stalled out investment. so i don't accept that somehow there won't be enough supply to meet the standards. let's not presuppose or prejudge that discussion in terms of what's going to happen in the marketplace. but i would rather get back to the rule that we're talking about and debating. i think i mentioned it in my opening comments and senator ernest followed that in walking through epa's legal authority to dooef deviate from the justifications. when you say it's inadequate domestic supply i think most ethenol producers would tell you the them the supply means there's plenty of biodiesel in

the marketplace. we stalled biodiesel we shut down biodiesel facilities because we didn't have enough access to the market. to me inadequate domestic supply means what anyone anyone would read it. when you say you can use that language to basically justify a refueling infrastructure waiver did you look at the legislative history in 2005 when the house language pretty clearly addressed this by saying based on the determination that there's an inadequate domestic wafrs, based on the determination that there's an inadequate domestic spla or distribution supply to meet the requirement, what does it tell you if amended out of that is distribux kpas pi and all you is

the supply. what would that inform you in terms of the legislative history? >> what i need to look at is the language in the statute. what it tells me -- >> if you're going to, you know, i think broadly read the language inadequate domestic supply and read it in a fairly twisted way you would look to the legislative history. that's what lawyers and 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? >> to me it means that there was discussion and interest in this issue specifically from at least some members and that that language did not end up in the statute. >> and what does it mean for lawyers that there's language proposed on one side, you go to conference and you eliminate or take out language? it means that's not the intent

of congress to use that for waiver. you can't boot strap the domestic supply language to deal with refueling infrastructure. i'm not unsemp thetic to the challenges you have. but let's not pretend that you have a very good legal argument for the waivers that you've done. that's the frustration, i think. 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' saying see there isn't a supply. well this isn't a supply because we didn't have certainty for investment. i'm not trying to beat up on you here. i've been a frequent flyer on this issue. you guys have numerous letters from me and others on this case. our producers come to us and say

what about this is confusing. and let's for a minute, and not with any kind of concession take corn based a necessity to reduce mandates on biofuels biodiesel? >> we're not reducing mandates on biodiesel. the statute takes biodiesel mandates up to 1 billion gallons. then after that, it's 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. >> but there's still room within the statute for increased volumes of biodiesel. i want to turn with the time i have left to talk a little bit about argentinean biofuels. i think senator sass 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 sugar cane ethanol. some of those -- both of those have the potential to displace domestic production especially undermine advance biofuel volume mandates. i think it's really important that we understand a little bit better on how you consider imports in the equation when you're developing rvos. this is enormously frustrating at a time when we're shutting down domestic supply of biodiesel, we're importing from argentina argentina. one of the reasons for this program is fuel energy sufficiency for america. >> well, senator, the statute doesn't 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's happening in the global markets. there are many many things that affect the amount of biofuel that could be imported to the united states. united states also exports biofuels. so we do pay attention to that. the amounts of biofuel coming in from foreign countries is relatively small. i know there's a lot of discussion and debate and disagreement about that, and i look forward -- i've encouraged people to make sure that they give us information about this during the comment period so we can understand what everybody is seeing. but the bottom line is that the statute doesn't distinguish between imported and domestic fuels. >> when you look at the numbers it's a third, but i think, you know, obviously a market north is into canada. then canadian biofuels comes into the east and west coast. so i understand the movement of biofuels. but i think that when we're 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's some -- yeah, there's some dispute about -- you know, there's so few things we disagree on. this happens to be one. but the program -- 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. i think that there has been a serious discussion not just in among colleagues here but certainly within the industry. and a serious concern that the intent of congress has not been followed here. so i look forward to seeing the schedule. i imagine that we're going to have ongoing discussions, whether it's in the agriculture committee or wherever we have

these discussions. this is an issue that's not going away any time soon. we're obviously trying to finish these years. but the worst thing that we can do is not get this done timely, not -- and i don't mean by just sending out a draft rollule. i mean by finalizing a rule so the marketplace has certainty. we'll live to fight about whether that number is right, but we cannot see this delay. it's incredibly disruptive. thank you, mr. chairman. >> this is the second round we're going to go through and more open conversation. we've been through this before in other settings. but this is going to be more open dialogue. we'll have the opportunity it be able to talk. i would mention one thing on my colleagues on this as far as congressional intent of the law, i would remind everyone especially when we're discussing corn-based ethanol, if there's anything that's clear in the law, it's clear that corn-based ethanol is a decreasing percentage of what's used in the days ahead.

by 2022, if i remember the number correctly, 44% of the ethanol used in the united states is to be cellulosic based on the law. so corn continues to decrease and cellulosic continues to increase. you have a big challenge. we're not producing near the amount. i do want ask you want a the cellulosic. epa chose to do a shift in definition somewhat. in 2013, if i recall correctly, adding in cng and 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 switch grass and the wood products and everything else, the compressed natural gas has been included in that category. was there a discussion? is that continued? is that some of the conversation that cng bleeds over into that cellulosic category more? where does that go from here as far as definitionly? >> i may need to get back to you on some of the specifics of that

question, but the additional fuels are coming into the -- qualify as cellulosic fuels. as those come in we add those to -- >> talk us through those and those definitions, the new fuels. >> the biggest one that's happened recently is biogas which was recently approved and is being produced in encouraging amounts. so that's one. we also have various ones that are in process. penny cress is one. there are several others. i'd be glad to provide you with details about what we have in the pipeline recently proposed and recently approved. >> the proposed volume, somewhere around 206 million gallons for 2017. i believe the mandate is somewhere around 4 billion gallons for that year. again, again, i come back to the -- i don't see any way we're not going to be in significant reset

period. help me understand -- we talked 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 on 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're looking on the horizon here, 2022 is not that far away anymore. what's the best model that we can see heading towards 2022? >> well, you're right. it's both near and far. 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 will be an

important place to think about that. i will say that it's our hope that the approach we've 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. >> so that's what i'm trying to get at. as everyone looks at it and there's a tremendous amount of capital investment, whether it's in iowa or wherever it may be, everyone is looking at a ten-year window in capital planing. what's going to happen 2022 is incredibly significant right now. because a facility doesn't come up to speed in a year or a year and a half two years. so that investment portfolio is incredibly important. 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

timeframe that you hope to accomplish knowing there are billions of dollars of investment that will be affected that have to have some advanced planning. >> so the standard itself set levels out to 2022 and in our view and the view of many, those very standards are not ones that would -- 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's the rule making 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 these volumes so we would not need to be talking about waivers in the future. >> so let me try to help provide some clarity here.

i want others to be able to join in this conversation. when you talk about the reset, you're talking about a reset of resetting a number or resetting a method of how you'll get to the number each time? >> my understanding is that our job is to reset the numbers. >> right. but that's the annual. i'm talking about the process of how the reset -- because you're right. we're talking about two different processes. the process toward setting the annual number, but then the process of how we'll do reset. will that process on how we'll do recess, a process of how we'll set the new numbers or resetting what the new numbers will be? >> so the statute gives us a number of factors to consider. so my understanding is that is what we will do. we will undertake a rule making, looking at all of those factors to determine then what the numbers should be in that reset rule making for years out into the future. >> okay. >> and then the annual -- i'm sorry to interrupt you. >> no 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. >> well, the statute goes through 2022. >> correct. >> so i'm not prepared to discuss 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 certainly looking at the statutory numbers. >> 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. >> uh-huh. >> okay. then i would just say to you again, it would be extremely important for all players involved that we start working towards certainty on 2022 on this. because there's a tremendous amount of capital planning going on right now either direction. >> yes. and thank you, senator. yes, the cellulosic has been an important move in iowa. we have biodiesel. we have the ethanol. that's 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 it earlier that the investors, when there's not a proposed -- excuse me, a set volume out there, they're hesitant to engage. so we have the two cellulosic plants that are up and moving but we have a third set to come online. but for any state, any investors in any state to move forward, they want to know that there is going to be set volume and a demand for those products. so we have to know what those volumes are to invest in this area, but we also need the infrastructure available. again, you've used that as an argument why we need to lower, you know, some of the volumes. but i think one of the original intents of this was to incentivize getting some of that infrastructure into place. you'll 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 don't have the type of infrastructure that we do in the midwest. so i would argue that we need to continue investing in this area, make sure that it is available. it is all about consumer choice as well. so senator peters asked something, and i would like you to follow up a little bit about the greenhouse gases. 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're proposing is actually a direction that will inkrees

increase those carbon emissions by less utilization of these biofuels. so maybe if you could comment a little bit about that and why you're not looking at greenhouse gas emissions. >> well, we do -- an underpinning of this program is reduction in greenhouse gas emissions. as more and more biofuels get into the system, especially advanced -- cellulosic advanced biofuels, that's where the real reductions can be. as you know, in order to qualify as an advanced biofuel the greenhouse gas e magsmissions need to be 50% less. that's 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's substantial increase. not as much as congress anticipated or hoped for, but from where we are now that represents substantial growth. so my point to senator peters was that in each individual annual volume rule, we don't reanalyze greenhouse gas emissions, but we know the greenhouse gas reductions associated with these different categories. 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's replaced by cellulosic advanced biofuel is greenhouse gas emissions safe. >> i would just like to make a point about this but -- i mean, you talk about the proposed 2016 standard for cellulosic biofuels. those fuels with the lowest

greenhouse gas emissions it's more than 170 million gallons, which is six times higher than the actual 2014 volumes. i think it's worth noting that it's likely because three commercial-scale refineries came online in 2014. and one more is slated for the end of this year. those by yoiobiorefineries were made possible by the investments that were before the disruption with the rule. i think when you look at -- since then, guess how many proposals have been online? zero. because we've disrupted through this rule and through the lack of timely rule making, we've 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. we can debate the wisdom of this law here in congress. that's our job. but it's your job to administer this the way congress intended. and that means doing it timely. because i think we could 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're going to have a crisis on cellulosic biofuels or ethanol before we actually give certainty to the market and let the market produce. >> i would agree. and with the cellulosic as well we have other advances coming with algae. of course, investors are not looking at that in a way that we had hoped they would if we had those set volumes. again, technology is advancing. it's a great renewable energy source. it's taking basically waste

products and producing a fuel that's 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. i'm at a point where i don't believe the epa is doing that. but i hope that we can work through these issues. thank you. >> so let me do something that everyone at home is going to be shocked at. let me take the side of the epa. the cellulosic was great theory and there are a lot of people experimenting with it. no one has been able to make it in a quantity that's affordable yet. and that's 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 industry, but after a decade of trying to make

this technology work, they couldn't make it work at a price that people could afford. now, there's a lot of experimentation with this. it's not close to being market ready. it's the challenge the epa has, that they have a mandate by 2022 to get to 44% of the ethanol that's used in the united states to be cellulosic, and no one can seem to crack the code to be able to actually make this in a way that's actually affordable. lots of folks experiments with switch grass and stocks and wood and algae and other great ideas. so far that's not a technology that exists. in some way, i feel like we're in the 1970s when president carter said they were starting all this research on solar power and. it's 2015 and we're not close to that number. a declaration and congress even setting a number doesn't mean the technology is going to catch up to be there. on the greenhouse gas side of things, the challenge you have is that you're also working on a

rule right now on ground-based ozone. ethanol increases ozone. in fact, epa's own study has come out and said if we hit the hf rfs total, the ozone levels go up significantly. so the challenge we're dealing with is how do we get rfs standards and decrease the amount of gas we're using and actually hit new ozone standards. one or were totwo of the three of those are not going to work. how far off am i? >> there's 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 developers. we spend a lot of time with them so we can understand the challenges that they're facing. 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. i think everybody wants those types of fuels to be successfully produced and marketed, and the more that happens, the prices will come down and people will use them. but i would agree with you senator lankford, that already many factors there. >> i need to ask you about the e-85 as well. you have this assumption that e-85 is going to dramatically increase in usage, even six months from now. i'm trying to figure out the assumptions that went into that because my understanding is there are enough e-85 vehicles on the road right now to meet the e-85 requirements but many of those individuals that have e-85 vehicles choose to purchase e-10. that's a consumer preference there. so i'm just trying to figure out how epa assumed that e-85 would suddenly jump when there are

e-85 owners that choose not to use that product. >> you're correct that there are lots of flex fuel vehicles on the road today that could use e-85. our information is there are about 3,000 stations in the country that provide e-85. 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 e-85 is different than the energy value of gasoline. i think people don't fully understand that. 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 can be an economical choice for them. i think that's a multiyear 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. >> but i'm trying to get at the actual methodology of -- is the assumption we're going to try to push the issue here, but there's not a method to say we anticipate based on car purchases or anything else or availability that people that have flex fuel vehicles will start using this product more. >> we've looked at a variety of things. we know there are flex fuel vehicles out there that could be using e-85 that are not now. there's not a precise mathematical formula senator, that -- >> it's more of an aspirational goal rather than an actual we see this, so we anticipate this use. >> well, it is -- i would say it's 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, 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. 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. >> i would say, too that just going a little further i have a diagram. you can pull this up on the internet. all of those e-85 pumps are located, and you'll see that most of them are in the upper midwest. again, a lot of flex fuel vehicles that are bought out there, they simply don't have access to e-85. those pumps and the infrastructure is not yet available

available. so if we had that infrastructure in place, we would see e-85 use go up. 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. fracking is a great example of that. and i support fracking. but it took many many years for that to become cost effective way of extracting fuel. so we have those challenges, but again, we're 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's a goal that everybody would like to see. thank you. >> as long as we're talking about cars, if you look at analysis -- and i think senator lankford alluded to engines and we obviously have had a great deal of discussion in the ag committee, including nascar drivers who come in and swear by

this as a fuel source. so i think the jury certainly isn't back on that issue. >> or $3 million nascar vehicle. >> but if you look at an analysis of model year 2015 warranty statements and owner's manuals, i think you'd see it reveals that auto manufacturers explicitly approve the use of e-15, which we haven't talked about yet, in approximately two-thirds of new vehicles. e-15 is approved by epa for all 2001 and newer vehicles which really accounts for about 80% 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? >> and i want to interrupt. i do want you to answer that question. i have an appropriations hearing i'm going to have to run back and forth, do a quick vote on. if you'll excuse me. if senator ernst can take the chair here. i will return. i have a quick vote in

appropriations and i'll be right back from there. so if senator ernst would take the chair as well. senator heitkamp is tough to work with, so hold your own. >> thank you. >> so e-15 is very promising as a way to get more ethanol into the system. and there's been a lot of discussion about vehicles using it and not using it. there's relatively little getting into the system now. i think there are fewer than 100 stations across the country that are offering e-15. 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. as more and more 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's a challenge, senator.

i grant you. >> i think if you looked at the chart that senator ernst just showed you, what behind that 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'm 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. you know, not the major distribution centers but those guys who now are concerned about the quality of their tanks, concerned about the regulation of e-15. what's the conversation back and forth between epa and the actual convenience stores and filling stations? >> 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 they might have about new technology an just being able to cover the cost of putting that infrastructure in by being able to sell that product. >> do you think you have clear rules on what epa's requirements are for that infrastructure? >> i believe so. >> a lot of them don't think so. a lot of them think there's a level of uncertainty and as a result, i think they tend to be concerned and maybe think about overbuilding infrastructure, overbuilding their tanks so that there's no concern at all later on. >> that's something i'd be happy to take back and look into senator. >> all right. so we aren't just talking about lender pumps and all of those issues, the infrastructure issues and what that means. we're also talking about long-term concerns about moving to e-15. so it would be good to figure out, you know, what role epa plays in providing the certainty

to our filling stations as it relates to converting and moving into e-15, which most vehicles now basically are approved for. >> glad to look into that. >> okay. >> all right. and with the e-15 too the impact to our u.s. consumers if they do have that choice and are using e-15, it is typically anywhere from a nickel to a dime lower even than the e-10. so the across the united states then the impact to our consumers is that there's a savings of about $5 billion to $7 billion per year in their own pockets. so it's something that i think we need to take a look at and continue to refine. but did you have any further questions, senator? >> as long as we have some time here and the chairman -- you know, when the cat's away.

when we look at the prices -- and it's 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 d.o.e. said we won't hit 10% blends by 2016. when you guys were plotting this out and fretting, did you consider the disruption that would have to the rin market and that would mean kind of long term? and does that inform how you want to deal with this in the future? >> so i think that one statement you said senator that everybody can heartily agree with is that this is incredibly complicated.

very very complex. i've been working on this now for two years, and i feel like i'm beginning to understand it. but i'm not an economist. so there's much discussion about this issue that goes on with people with that kind of training and understanding. what we tried to do was provide more information for the public record about what we have 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 very complex and is affected by many many things not just the volumes that we set. >> don't you think you were a major driver? volumes were a major driver? >> i wouldn't say it's not a factor, but prices of feed stocks and the many things that go into producing fuel have a lot to do with this as well.

so it's not simple. it is complex. we pay attention to rin prices but we don't formally factor them into our decision making because it is so complex. it's 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. as long as biofuels are more expensive to produce than gasoline, you know, 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.

>> yeah, i guess we'll 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, you know, this disruption has created an additional disruption in the marketplace. i want to ask the chairwoman move senator baldwin's statement for the record have it introduced in the report. >> yes, without objection. >> thank you. >> yes and i could go on all day i think about the value and 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've 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. again, clean burning obviously and very supportive of our economy here in iowa which is why even though it wasn't expressly written in the law that we use domestic sources of fuel, i would encourage that in the future as something 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? >> i just have a final comment, and it's probably not exactly on target here. but we've been talking a lot about advanced agricultural manufacturing, meaning let's use products that are renewable, let's use green products. if you look at the fuels industry, the fuels industry has been a building block. it's been a foundational piece.

the technology that was developed in fuels later leads to a lot of great advanced manufacturing using renewables. 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. as debbie likes to say, you can eat your car seat because it's made out of soybeans. so i think this has been an industry that's been very beneficial to the united states of america and i think beneficial to consumers. 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 is responsible follows that policy. now, like i said i'm not unsympathetic, but in part, this

was to drive the infrastructure. when you retreat from the number, it has the opposite effect and it just creates the spiral to a place where we don't want to be. because that would not be a place that would be consistent with congressional intent. so i look forward to working with you, ms. mccabe and talking more about kind of what the future holds. i like forward to hearing the outcome of the hearing that you're going to have in kansas city. i know it'll be very robust. i know you're 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. i would particularly ask you to look at that in the biodiesel area. >> yes and just on a final -- is the senator on his way back?

okay. yes, 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're doing and how we want to encourage the market to develop. 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. sor 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 that we would 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're producing it and sending it out to consumers. so we will at this point just recess for just a few minutes and we'll wait for senator lankford to conclude the

meeting. thank you. >> thank you senator.

>> so the senate homeland security committee hearing is taking a little bit of a break. you heard oklahoma senator james lankford, who's chair, said he needed to attend another briefing, another hearing, and that he would return to continue this hearing on the epa's renewable fuel standard program. when he return we'll continue with our live coverage here on

c-span3.

>> again waiting for the resumption of this senate homeland security subcommittee hearing on the epa's renewable fuel standard program. it is in recess now as the chair, oklahoma senator james lankford, is attending another hearing at this point. he should be back shortly and our live coverage will resume. over in the house, members debating trade promotion authority. this is fast-tracked trade legislation that had been approved in the house back on june 12th. the vote on that was 219-211, but the bill couldn't move forward because it was a part of a package of bills that all needed to advance. earlier today, we spoke with a capitol hill reporter who gave us the latest on this legislation. >> what do we know about the meeting that took place yesterday and how republicans are planning their reaction to

this case? >> well there were two republican meetings yesterday one in the house, one in the smath. it was kind of the first time the rank-and-file members got to hear about the planning for the big supreme court decision in obamacare, that as you said, we are expecting any day now. it could be today. so in the house, members got to hear kind of the outlines of a plan. it involves giving block grants to states. so basically giving a chunk of money to states that the states could then decide how to spend to cover people, provide health insurance in that state. it lasts for two years then kind of sunsets the whole law so that all of obamacare would go away after two years. the idea is that a republican president would provide a republican alternative to the

law. >> and peter sullivan, who is in charge on sort of crafting the response? who do we expect to be the first to sort of come out from republican leadership on capitol hill, if and when that decision comes down? perhaps today, but more likely a little later in the month, one of those later decision days. >> well, there are different leaders in both the house and senate. they say they're talking to each other, but that's one of the questions, is how closely they're going to be able to combine the house and senate plans. but in the house it's mainly paul ryan who's the chairman of the ways and means committee. he's been leading an effort with two other committee chairmen. then over in the senate it's senator john barasso of wyoming. he's been leading an effort with some other committee chairmen, orin hatch, lamar alexander. so those are kind of the main working groups, but there have also been a range of other plans in both chambers, which kind of complicates things a bit. so the senate says they're still

trying to kind of combine the different plans from the different republican senators they've had over there. >> we've shown you peter sullivan's story in "the hill" newspaper. here's a front page story from today's "new york times," also on this same topic. the headline "gop is wary about winning on health law." if you want to read "the hill's" story or "new york times" story, you can check that out. but before you go, what's the update from the white house? is there any fallback plan for the white house that's been publicized about what the white house will do if the president ends up losing on this federal subsidies decision? >> well the white house has long said they do not have a plan. they say they're confident that they're going to win at the supreme court and that there's really nothing they can do if these people are losing subsidies. lately, they've opened up a little bit. the house secretary, sylvia burwell, says they're going to do everything they can, but that's not much. congress and the states have to

do most of it. and it is also interesting that the white house is basically on track to veto whatever the republican plan is. the republican plan is likely to repeal big parts of obamacare like the individual mandate the environment that everybody buys health insurance. so we could be headed for kind of a standoff here if the white house is going to veto what the republicans have, and the republicans are not interested in just restoring the subsidies the way that the white house wants them to. >> the supreme court ruling on the nation's health care law is not coming down today. the supreme court will delay that until maybe sometime later this week, possibly next. we'll have live coverage of that, of course when the supreme court does make a decision. and once again, here we're live on capitol hill. we continue waiting for this homeland security subcommittee hearing on epa regulations and renewable fuel standards to resume. they're in a brief break now as

the chitommittee chair is attending another hearing. he should be back shortly. we'll have live coverage when it continues here on c-span3. while we wait, we'll go back to this morning's "washington journal" on trade legislation being debated in the house. >> he's joining us amid a busy seven days on the issue of trade on capitol hill. there's another vote today on tpa, that fast-tracked trade authority legislation. how do you plan on voting? >> i will stay where i was a week ago, which is i'm going to vote no on this. i do so as somebody who -- my office has actually organized trade missions for connecticut companies over the last 8 1/2 years i've been in congress. you know, i think exports are a really healthy way to grow our economy. but, you know, these trade -- well, first of all, the trade authority, which is really what we're voting on, is a six-year grant of authority to this

president and his successor, whoever that is to basically allow a process in congress where, you know, up or down votes are only permitted, no amendments and that's just too much in my opinion of a concession of constitutional authority given the high stakes that trade deals encompass. you know, you've heard it i'm sure, for weeks now about the fallout from past trade deals. the country of origin labeling, which you were just discussing a few moments ago, in my opinion got undercut because of nafta. that's why, you know, congress has to be very very careful when they allow that kind of power to be shifted to the executive branch. >> why is the president and house democrats so far apart on this? you're one of the 144 republicans who voted no after the president made a personal appeal. >> 144 democrats.

>> also republicans. >> i understand that. so my experience of being overseas with connecticut companies is that the issue of currency manipulation, which has not just been from labor but also the ceo of ford motor company articulated it the other day that if you do not have real enforceable rules on countries that intentionally intervene in currency markets as a way of creating a competitive advantage, then frankly it's kind of a fool's errand to think that you're getting any kind of level playing field in terms of selling u.s. goods overseas. the trade representative, mr. froman, has made it crystal clear he has no intention of including that kind of provision in the text of the agreements. again, there's some side language in a couple of the other statutes that are sort of swirling around here right now in terms of votes, but if it's not included in the trade provisions itself, as we saw with country of origin labeling

then these federal laws can be struck down by international tribunals tribunals. to me, it's almost malpractice not to address this issue, which, you know, despite all the efforts to create labor standards, environmental standards, food safety standards, if you don't have protections to our economy in terms of other countries that engage in these practices, then you really are not helping both businesses and workers out there to have a fair free trade environment. >> for folks like yourself, like your colleague rosa deloro, who's been very outspoken on this, how does this play out in the next couple days and weeks on capitol hill? is there a mechanism now that this vote has been split and come back to the house that folks like yourself will use to try to slow this down? >> sure. so last night we learned that the rules committee is sending over a new effort, and it appears that there's going to be a vote on just fast-track authority alone, attached to

another senate bill. that by itself doesn't send the bill to the president for signature. it sends it back to the senate. clearly a lot of the senate democrats who voted for the fast-track bill earlier made it crystal clear they won't do it unless the job retraining component is included or part of a package. >> the so-called taa. which which >> which is a wonderful program. i can tell you stories in my district where it's really helped people. it's just unclear how they're going to make that happen. at this point we're in this sort of parliamentary chess game right now in terms of just the various pieces. the vote last week shows that there probably are enough votes in the house for today's effort to go forward with more than 218. so again, the next shoe to drop is really just what the senate does after it's sent back in just a part of the package that senate democrats have said they

would support. >> if you want to join the conversation this morning with congressman joe courtney, democrat of connecticut, phone lines are open. republicans, 202-748-8001. democrats, 202-748-8000. we'll start with karen on our line for republicans calling in from new york. karen, good morning. >> good morning. i have basically statements to make. although, i am republican, i don't vote party. i do vote issues. and i am dead set against this trade propaganda that we're hearing. too much of it concerns corporations concerns business. i want to thank you, sir, for voting against the trade bill. there's nothing in this bill that helps the american people. it's all about people sir. and i thank you again because my party doesn't seem to understand that. they seem to be cornering

themselves with corporations and the idea that it hurts that any -- not voting for a trade bill will hurt our standing with mexico and they may be angry at us because we want our country of origin on our labeling. that's imperative. i know when i shop i shop for country of origin. i trust and i want to continue to trust what i purchase on the shelves. i want to continue to know that my country is looking out for the betterment of me my family and fellow citizens. 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 was on e-15. i would have appreciated being in that dialogue as well. but i want to get a chance to follow up with you on that as well. you and i have had this conversation already about e-15. epa believes vehicles from 2001 forward can handle e-15. 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 e-15 to be within their warranty. would you agree the vast majority of the manufacturers do not believe e-15 fulfills their warranty from 2001 to about 2013? >> i wouldn't want to characterize the number. i know that's an issue for some manufacturers. >> right. i have a chart that walks

through that, that actually details each and every manufacturer and if they have any models at all that allow e-15 to be within their warranty. it's only been within the past year, year and a half that even the majority even above 50% of the manufacturers have any vehicle model at all that would say e-15 would be tolerable on their engines. the challenge we have is increasing the e-15 really means you're increasing e-15 on new vehicles. so it's a fairly limited amount since most vehicles are older. my truck is 12 years old that i drive. that's common for most americans to have an older vehicle. so the challenge is increasing numbers of the e-85 and the assumption there that we're going to have this large increase on e-85 and there will be a jump on e-15 use when there's a limited number of locations even to get it at this point. i'm still going back to the assumptions and the pattern here. >> yeah. >> again we can talk about viability and energy usage and all that stuff, but it's a pattern of how do we discern

what's coming in epa and the method of making their decision. >> we did not actually assume hardly any e-15 in these proposals for the you cite, and quite a few numbers of stations offer it currently. >> we're talking about the biodiesel, and that has exceeded the expectations of the amount that is manufactured. i want to get a percentage or the method of your counting on the small percentage of biodiesel that cannot handle lower temperatures. we have a certain percentage out there, and i believe it's 56 degrees and down and it starts turn into a solid so that doesn't work for part of the biodiesel. the question is how did you do that estimate? the method of that? the expectations? the biodiesel is an open amount and they can set the amount from

year to year, and how are you trying to split the two to say this part can be used in el paso texas and southern arizona year round, versus places that can use it year round. >> 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 follow-up and confirm with you with more details with the volumes we are proposing here we are not in danger of exceeding the amount the system can absorb without getting into any sort of performance problems. >> so the assumption -- what i am trying to get at, the assumption for 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 leading you to say the growth is in the area that is not the part that has a difficult time with the lower temperatures? >> i am not sure it's different

fuel is it? we will follow-up with your specifics. >> there is one that uses animal products, basically, and that type of biodiesel, if you get below 56 degrees it doesn't work well, 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 and if you head north very far you will have problems with that. when we start talking about prices according to the cbo, if it was repealed or the future mandates kept at 2014 numbers corn-based ethanol it's already in the fuel system and it's a viable fuel and consumers want to be able to purchase it and cbo estimated if the mandate wept away we will still stay at

15 billion gallons of corn-based ethanol even without the mandate, and you are pushing products in some areas the market is not requesting, i guess, at that point, and the mandate is to push it out in other areas. the challenge is of that 13 billion cbo is estimating the market really wants. is that a baseline or is that a number you all use in your estmations. is that a baseline number? >> that number, i believe, is reflective of the 10% amount that ethanol now fills in gasoline, so -- >> the blend wall location. >> the blend wall location. we don't set a standard for ethanol in the rule. ethanol fills in, because it's

considered conventional biofuel. 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 e 1010 accommodates on its own, and we follow that. >> when we studied it, the mandate went away on corn-based ethanol, and their study said 13 billion gallons would be continued to be used, and people like to use it and the price that consumers pay for gasoline would go down. which i thought was an interesting study to be able to look at. there's a lot of push and pull and that's not what this hearing is about and i wanted to be

able to remind folks the people that do the score keeping around here reminded us corn-based ethanol works in the market regardless without the mandate and the prices would actually decrease for consumers if we remove the mandate and pull it away from us. i want to go back to something we started talking about earlier, and that's the ozone issue. >> uh-huh. >> i know you have to balance both of these as well as many of other things. how are we balancing this in the internal conversations as to what happens to ozone levels and how ethanol increases the ozone levels and the coming standard coming. >> so the setting of the ozone standard is a health-evidence based decision that the administrator needs to make. it's about 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's 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 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, the ozone levels, exceed that standard and that's not everywhere in the country, not by a long shot. so once you identify those areas you look to see the emissions

contributing to the high ozone levels. the way ethanol can impact ozone is not uniform across the country, and it relates not just to the use of ethanol but the production of ethanol so that could be a localized situation and those may be areas where ozone levels are healthy already and meet the standard. so it's -- 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. >> we are still on the same challenge with that, and we have a mandate to use more either null and a coming mandate to decrease the ozone, and those two are going to be in competition. we are going to have cities and communities that have an increasing mandate for ethanol and then they are going to have to find ways to use more public

transportation or to use -- decrease their lawn mower usage, or some will have to relocate or retrofit based on one mandate competing with another one. this is going to be an ongoing conversation where communities are going to say you are telling us to do this, and we are going to have to do this. >> it's a question about any given area what is contributing to the high ozone levels and i don't think that it's fair to conclude senator, right now there are areas that will be significantly affected by increased knocks exclusively because of ethanol use. >> we will have locations that will be point to outside the range, and that .2 can be ethanol based.

the numbers are so close in this, and if it was a big gap i would understand that, but they are not in many of the locations. it's very, very close. ethanol will be one of those contributing factors to it. so this is just going to be a lost cost issue for a lot of communities. i am trying to figure out how the epa is going to address that. we don't have to solve it the two of us. there will be a different piece of legislation and a different committee is going to do that and i am trying to figure out the process of how that will be made because that will be different in different communities. >> i understand that and 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 ozones in areas where ozone levels are high, and that's the process that would ensue if a standard is changed. so there are lots of things that

contribute to ozone nonattainment in areas that have a problem. >> would there be the possibility in the portfolio of options a community could say if they are below .2, they -- >> we have competing mandates. i am trying to figure out the process of making that decision. if they are going to have ten things on the able, and a decreased use of ethanol in their area is not an option when we know it's a contributing factor, why couldn't that be on the table as well because now you have two competing mandates? >> i think that's a good question, senator. >> we will have to resolve that in the days ahead. 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