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On August 12, 2013, the U.S. Department of Agriculture (USDA) released its "World Agricultural Supply and Demand Estimates" report in which it projects the U.S. will produce a record 13.76 billion bushels of corn in 2013. The report is available online.


Representatives from ethanol trade groups Growth Energy and the Renewable Fuels Association (RFA) praised the news and argued that it showed the federal Renewable Fuel Standard (RFS) was not contributing to higher food prices and that it "should be the last nail in the coffin of the ridiculous 'food versus fuel' argument." RFA's press release is available online.
 


 

The American Petroleum Institute (API) this week launched its second ad in selected markets against the federal RFS. The ad is being aired in California, Colorado, Illinois, Kentucky, Michigan, Ohio, and Washington, D.C. It comes just after EPA issued its final 2013 RFS rule (more information is available online), and as the House Energy & Commerce Committee leadership is working on potential modifications to the RFS (more information is available online). The ad continues the message of the refining industry that the RFS mandates "unworkable" volumes of renewable fuel in the U.S. fuel supply. The renewable fuel industry continues to argue that the RFS law contains sufficient flexibility to account for changes in the market. The industry points to the final 2013 RFS rule to illustrate this, as EPA significantly lowered the cellulosic volumes to adjust for market realities.


Also this week, API and the American Fuel and Petrochemical Manufacturers (AFPM) jointly petitioned EPA to lower its 2014 total ethanol requirements to 9.7 percent of total gasoline supply in the country. This request follows language in EPA's final 2013 RFS rule suggesting that the Agency is considering lowering renewable fuels obligations to help account for the impending blend wall in its upcoming 2014 rule. API and AFPM argue that lowering the 2014 renewable volume obligations would reduce the cost burden of the RFS to the refining industry.
 


 

The House Energy & Commerce Committee's Subcommittee on Energy and Power held its much anticipated two-day hearing on the RFS, with 16 witnesses from both sides testifying. The following is the full list of witnesses:


Panel I
• Mr. Jack N. Gerard, President and CEO, American Petroleum Institute
• Mr. Charles T. Drevna, President, American Fuel & Petrochemical Manufacturers
• Mr. Bob Dinneen, President and CEO, Renewable Fuels Association
• Mr. Michael McAdams, President, Advanced Biofuels Association
• Dr. Jeremy I. Martin, Senior Scientist, Clean Vehicles Program, Union of Concerned Scientists


Panel II
• Mr. Tom Buis, CEO, Growth Energy
• Mr. Shane Karr, Vice President, Federal Government Affairs, The Alliance of Automobile Manufacturers
• Mr. Todd J. Teske, Chairman and CEO, Briggs & Stratton Corporation
• Mr. Robert Darbelnet, President and CEO, AAA
• Mr. Joseph H. Petrowski, CEO, The Cumberland Gulf Group, on behalf of Society of Independent Gasoline Marketers of America and National Association of Convenience Stores
• Mr. Joe Jobe, CEO, National Biodiesel Board


Panel III
• Ms. Pam Johnson, President, National Corn Growers Association
• Mr. Bill Roenigk, Senior Vice President, National Chicken Council
• Mr. Ed Anderson, CEO, Wen-Gap, LLC, on behalf of National Council of Chain Restaurants
• Mr. Scott Faber, Vice President of Government Affairs, Environmental Working Group
• Mr. Chris Hurt, Professor, Department of Agricultural Economics, Purdue University


Information on the hearing and the witness statements are available online.


The Subcommittee's background memo on the hearing is available online.


The hearing follows the five white papers recently released by the Subcommittee requesting stakeholder input on various aspects of the RFS. It is believed that Subcommittee Chair Ed Whitfield (R-KY) is working to ultimately modify the RFS through the legislative process. In fact, on the first day of the hearing, Subcommittee Member John Shimkus (R-IL) asserted that the petroleum and biofuels industries must work toward advocating in good faith for constructive modifications to the law. He also mentioned that he does not believe there are enough votes to repeal the law. The petroleum industry is advocating for the law's repeal, while the biofuels industry generally is advocating that the RFS is working as intended and that any changes to it should be made under the existing law and within the regulatory process.


Witnesses representing these industries made these points during the hearing on July 23, 2013. On July 24, 2013, witnesses from the livestock industry argued that the RFS negatively impacts the cost and availability of feed. The livestock industry helped lead the charge for EPA to temporarily waive RFS requirements due to the drought which affected crops last year. EPA denied the waiver request, which came from governors of states heavily involved in the livestock industry. It found that the RFS requirements would not severely harm the economy or environment of a state, a region, or the United States. EPA's Fact Sheet on this waiver decision is available online.
 

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Activity on the federal Renewable Fuel Standard (RFS) is in full swing on Capitol Hill. Last week, the House Energy & Commerce Committee's Subcommittee on Energy and Power issued its fifth and final white paper on the RFS seeking input from stakeholders on "implementation issues" with the policy. The white paper is available online.


The white paper follows the Subcommittee's hearing last month at which government witnesses testified on the effectiveness and implementation of the RFS. Specifically in this latest white paper, the Subcommittee is requesting, among other things, input on the effectiveness of EPA's annual process of setting the required volume obligations (RVO) for each of the four types of fuels under the RFS: biodiesel, conventional, advanced, and cellulosic. The questions appear to target oil industry criticisms that EPA sets the annual RVOs for cellulosic biofuels too high compared with the availability of those biofuels on the market.


On Monday, June 15, 2013, the Subcommittee announced that it will hold a two-day hearing on the RFS beginning on July 23, 2013, to examine stakeholder input on the policy. The hearing details, which will be updated closer to the hearing date, are available online. A witness list has not yet been published, but witnesses are expected to include representatives from all sides of the debate, including refiners, biofuel producers, and environmentalists. Comments made by Subcommittee Chair Ed Whitfield (R-CA), combined with the white papers and hearings, suggest that legislation may be introduced to modify the RFS.


Members of the Fuels America Coalition, including many in the biofuels industry, are working to avoid this result and protect the RFS in its current form. The group is advocating this message on Capitol Hill this week ahead of next week's House Subcommittee hearing, and as the Senate Energy and Natural Resources Committee this week held a hearing "to explore the effects of ongoing changes in domestic oil production, refining and distribution on U.S. gasoline and fuel prices." In response to expected criticisms during the hearing of the RFS and its impact on gas prices, members of the Fuels America Coalition made public statements attempting to "dispel the myths" the refiners portray about the policy, including its impact on gas prices. The group argues that the RFS has had only a positive effect on gas prices, with the increase in ethanol helping to reduce gas prices.


In the meantime this week, the refining industry announced that it is strengthening its campaign for the repeal of the RFS.

 

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