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BACKGROUND ON RENEWABLE IDENTIFICATION NUMBERS UNDER THE RENEWABLE FUEL STANDARD HEARING BEFORE THE SUBCOMMITTEE ON ENVIRONMENT OF THE COMMITTEE ON ENERGY AND COMMERCE HOUSE OF REPRESENTATIVES ONE HUNDRED FIFTEENTH CONGRESS SECOND SESSION JULY 25, 2018 Serial No. 115–158 ( Printed for the use of the Committee on Energy and Commerce energycommerce.house.gov U.S. GOVERNMENT PUBLISHING OFFICE 35–909 WASHINGTON : 2019 VerDate Nov 24 2008 13:37 May 20, 2019 Jkt 037690 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 U:\MY DOCS\HEARINGS 115\HEARINGS\115-158 CHRIS COMMITTEE ON ENERGY AND COMMERCE GREG WALDEN, Oregon Chairman JOE BARTON, Texas FRANK PALLONE, JR., New Jersey Vice Chairman Ranking Member FRED UPTON, Michigan BOBBY L. RUSH, Illinois JOHN SHIMKUS, Illinois ANNA G. ESHOO, California MICHAEL C. BURGESS, Texas ELIOT L. ENGEL, New York MARSHA BLACKBURN, Tennessee GENE GREEN, Texas STEVE SCALISE, Louisiana DIANA DEGETTE, Colorado ROBERT E. LATTA, Ohio MICHAEL F. DOYLE, Pennsylvania CATHY MCMORRIS RODGERS, Washington JANICE D. SCHAKOWSKY, Illinois GREGG HARPER, Mississippi G.K. BUTTERFIELD, North Carolina LEONARD LANCE, New Jersey DORIS O. MATSUI, California BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida PETE OLSON, Texas JOHN P. SARBANES, Maryland DAVID B. MCKINLEY, West Virginia JERRY MCNERNEY, California ADAM KINZINGER, Illinois PETER WELCH, Vermont H. MORGAN GRIFFITH, Virginia BEN RAY LUJA´ N, New Mexico GUS M. BILIRAKIS, Florida PAUL TONKO, New York BILL JOHNSON, Ohio YVETTE D. CLARKE, New York BILLY LONG, Missouri DAVID LOEBSACK, Iowa LARRY BUCSHON, Indiana KURT SCHRADER, Oregon BILL FLORES, Texas JOSEPH P. KENNEDY, III, Massachusetts SUSAN W. BROOKS, Indiana TONY CA´ RDENAS, CaliforniaERR67*UL MARKWAYNE MULLIN, Oklahoma RUIZ, California RICHARD HUDSON, North Carolina SCOTT H. PETERS, California CHRIS COLLINS, New York DEBBIE DINGELL, Michigan KEVIN CRAMER, North Dakota TIM WALBERG, Michigan MIMI WALTERS, California RYAN A. COSTELLO, Pennsylvania EARL L. ‘‘BUDDY’’ CARTER, Georgia JEFF DUNCAN, South Carolina SUBCOMMITTEE ON ENVIRONMENT JOHN SHIMKUS, Illinois Chairman DAVID B. MCKINLEY, West Virginia PAUL TONKO, New York Vice Chairman Ranking Member JOE BARTON, Texas RAUL RUIZ, California TIM MURPHY, Pennsylvania SCOTT H. PETERS, California MARSHA BLACKBURN, Tennessee GENE GREEN, Texas GREGG HARPER, Mississippi DIANA DEGETTE, Colorado PETE OLSON, Texas JERRY MCNERNEY, California BILL JOHNSON, Ohio TONY CA´ RDENAS, California BILL FLORES, Texas DEBBIE DINGELL, Michigan RICHARD HUDSON, North Carolina DORIS O. MATSUI, California KEVIN CRAMER, North Dakota FRANK PALLONE, JR., New Jersey (ex TIM WALBERG, Michigan officio) EARL L. ‘‘BUDDY’’ CARTER, Georgia JEFF DUNCAN, South Carolina GREG WALDEN, Oregon (ex officio) (II) VerDate Nov 24 2008 13:37 May 20, 2019 Jkt 037690 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 U:\MY DOCS\HEARINGS 115\HEARINGS\115-158 CHRIS C O N T E N T S Page Hon. John Shimkus, a Representative in Congress from the State of Illinois, opening statement ................................................................................................ 1 Prepared statement .......................................................................................... 3 Hon. Paul Tonko, a Representative in Congress from the State of New York, opening statement ................................................................................................ 4 Hon. Greg Walden, a Representative in Congress from the State of Oregon, opening statement ................................................................................................ 5 Prepared statement .......................................................................................... 6 Hon. Frank Pallone, Jr., a Representative in Congress from the State of New Jersey, opening statement .......................................................................... 6 WITNESSES Brent Yacobucci, Energy and Minerals Manager, Congressional Research Service ................................................................................................................... 8 Prepared statement .......................................................................................... 10 Sandra Dunphy, Director, Energy Compliance Services, Weaver and Tidwell, LLP ........................................................................................................................ 26 Prepared statement .......................................................................................... 28 Paul Niznik, Senior Consultant, Argus Media Incorporated ............................... 44 Prepared statement .......................................................................................... 45 Gabriel E. Lade, Assistant Professor of Economics, Iowa State University ....... 46 Prepared statement .......................................................................................... 48 Corey Lavinsky, Director Oof Global Biofuels, S&P Global Platts Analytics ..... 66 Prepared statement .......................................................................................... 68 SUBMITTED MATERIAL Statement of the Renewable Fuels Association .................................................... 102 Transcript of the Subcommittee on Oversight and Investigations’ hearing entitled, ‘‘RIN Fraud: EPA’s Efforts to Ensure Market Integrity in the Renewable Fuels Program’’ 1 1 The information can be found at: https://docs.house.gov/meetings/IF/IF18/ 20180725/108610/HHRG-115-IF18-20180725-SD099.pdf. (III) VerDate Nov 24 2008 13:37 May 20, 2019 Jkt 037690 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 U:\MY DOCS\HEARINGS 115\HEARINGS\115-158 CHRIS VerDate Nov 24 2008 13:37 May 20, 2019 Jkt 037690 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 U:\MY DOCS\HEARINGS 115\HEARINGS\115-158 CHRIS BACKGROUND ON RENEWABLE IDENTIFICA- TION NUMBERS UNDER THE RENEWABLE FUEL STANDARD WEDNESDAY, JULY 25, 2018 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ENVIRONMENT, COMMITTEE ON ENERGY AND COMMERCE Washington, DC. The subcommittee met, pursuant to call, at 9:15 a.m., in room 2322 Rayburn House Office Building, Hon. John Shimkus (chair- man of the subcommittee) presiding. Members present: Representatives Shimkus, McKinley, Harper, Olson, Flores, Hudson, Walberg, Carter, Duncan, Walden (ex offi- cio), Tonko, Ruiz, Peters, McNerney, Cardenas, Pallone (ex officio), and Loebsack. Staff present: Samantha Bopp, Staff Assistant; Kelly Collins, Legislative Clerk; Jerry Couri, Deputy Chief Counsel, Environ- ment; Wyatt Ellertson, Professional Staff Member; Margaret Tuck- er Fogarty, Staff Assistant; Adam Fromm, Director of Outreach and Coalitions; Jordan Haverly, Policy Coordinator, Environment; Mary Martin, Chief Counsel, Energy & Environment; Sarah Mat- thews, Press Secretary, Energy & Environment; Drew McDowell, Executive Assistant; Brannon Rains, Staff Assistant; Austin Stonebraker, Press Assistant; Hamlin Wade, Special Advisor, Ex- ternal Affairs; Everett Winnick, Director of Information Tech- nology; Jean Fruci, Minority Energy and Environment Policy Advi- sor; Tiffany Guarascio, Minority Deputy Staff Director and Chief Health Advisor; Caitlin Haberman, Minority Professional Staff Member; Rick Kessler, Minority Senior Advisor and Staff Director, Energy and Environment; Alexander Ratner, Minority Policy Ana- lyst; and C.J. Young, Minority Press Secretary. OPENING STATEMENT OF HON. JOHN SHIMKUS, A REP- RESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS Mr. SHIMKUS. I’d like to call the Subcommittee on the Environ- ment hearing to order and recognize myself for 5 minutes for an opening statement. And, really, before I start going through some prepared text, I want to allow the interested parties that are—oh, is that Whitfield there? Former member of the committee. And I see Kenny Hulshof, former member of the House. Good buddy of mine. So a lot of other friends out there. To interest groups, we plan to legislate and we are about ready to go on an August break and I would encourage (1) VerDate Nov 24 2008 13:37 May 20, 2019 Jkt 037690 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 U:\MY DOCS\HEARINGS 115\HEARINGS\115-158 CHRIS 2 you to educate, especially members of the subcommittee, take the time during the break and visit with them as we try to move for- ward. To my colleagues on both sides, I would encourage you to do your homework on your free time so that when we come back we can really have a good discussion. I would like to have a really open process as we go through—actually put down original text and then go through some—a markup that wouldn’t be preordained but we would work through some of the processes. So that’s just an editorial comment, and then I will start with my prepared opening statement. Today’s hearing continues this subcommittee’s ongoing efforts to examine the future of our nation’s transportation fuels. One of the most significant programs that influences transportation fuel in America is the Renewable Fuel Standard, today’s topic of discus- sion. More specifically, the focus on this hearing is to provide mem- bers the opportunity to better understand Renewable Identification Numbers, frequently referred to as RINs. RINs are the main component of the Renewable Fuel Standard’s tradable credit system and serve as its compliance mechanism. RINs are attached to renewable fuel gallons at the time of produc- tion and they are separated when that renewable fuel is blended into the Nation’s nonrenewable fuel supply, at which time the blending party can use the RINs to comply with the RFS or they can trade the RINs to another