EPA, oil groups reach settlement on ethanol mandate

Source: By Christopher Doering, Des Moines Register • Posted: Monday, April 13, 2015

The Obama administration Friday proposed a timeline it would use to establish how much ethanol must be blended into the motor fuel supply in a settlement with oil industry trade groups that had sued to implement the often-delayed rules.

The American Petroleum Institute and the American Fuel & Petrochemical Manufacturers filed a lawsuit in March against the Environmental Protection Agency for repeatedly failing to meet deadlines to set blending requirements for the Renewable Fuel Standard in 2014 and 2015. The oil groups and ethanol producers, who rarely agree on anything relating to the mandate, both said the delays made it difficult for them to plan and invest.

The Renewable Fuel Standard requires increasing amounts of alternative fuels, much of it made from corn, to be blended into millions of gallons of fuel pumped into cars and trucks by motorists each year.

“We are determined to get back on track,” Christopher Grundler, director of the EPA’s Office of Transportation and Air Quality, told reporters. “Our goal is to provide the market with the certainty it needs to continue to grow renewable fuel volumes.”

The 2014 figures, which are now on track to be completed two years after they were due, will reflect how much renewable fuel was actually consumed last year. The EPA said it would finalize the 2016 figures before the end of the year, even though that was not part of the agreement. The EPA is supposed to finalize the blending levels by Nov. 30 of the preceding year.

Iowa U.S. Rep. Dave Loebsack, a Democrat, said the delay in finalizing the blending requirements has been devastating for agriculture and rural America. “It should have never taken this long in the first place,” Loebsack said. “By the time this proposal is submitted and finalized, our farmers and agriculture communities will have waited more than two years to get the certainty they deserve.”

Iowa produces more ethanol than any other state.

The oil groups said that while they were hopeful the agreement would provide some much-needed clarity, it does not change the fact that the Renewable Fuel Standard no longer works and should be repealed. Lawmakers in Washington have proposed legislation to roll back or end the existing standard, but those efforts have failed to gain traction.

“The only long-term solution is for Congress to repeal the program and let consumers, not the federal government, choose the best fuel to put in their vehicles,” said Stacy Linden, American Petroleum Institute’s general counsel. “Failure to repeal the unworkable law could put millions of motorists at risk of higher fuel costs, damaged engines, and costly repairs.”

Grundler said the Renewable Fuel Standard has been a challenging program for the EPA to implement. Not only is it beset by different stakeholders who view the measure differently, but the annual blending levels are supposed to be completed within 12 months, while similar rules from the agency often take two years.

He said the EPA’s task is made more difficult because of the “blend wall,” the point at which the amount of renewable fuels required exceeds the amount blenders can reasonably mix in. Currently, most gasoline contains 10 percent ethanol. For more ethanol to be blended in, a greater amount of fuel would need to contain gasoline with 15 percent or 85 percent of the renewable fuel.

“The fact is today there are way more gasoline stations that sell E10 and not very many today that sell E15 or E85,” Grundler said. “Those are facts that we can’t ignore.”

Ethanol groups said the agreement between the EPA and the trade groups was “a good start.” They expressed optimism that the agency will be able to implement future rules on time.

“No one has benefited from the delays in setting annual renewable volume obligations,” said Bob Dinneen, head of the Renewable Fuels Association. “While we are sympathetic to the difficulty EPA faces in promulgating annual targets, the statute is clear about the volumes required, and the agency simply has to do a better job moving forward.”