EPA rolls out E15 rule, aiming for summer sales

Source: By Marc Heller, E&E News reporter • Posted: Tuesday, March 12, 2019

EPA made it official yesterday: The agency wants to make higher-ethanol fuel available year-round beginning this summer, a major victory for farm organizations and the renewable fuel industry.

In a nod to complaints from petroleum refiners, the agency also proposed changes to the renewable fuel credits system, the backbone of the federal renewable fuel standard — a balancing act that President Trump personally directed last year.

The proposal would remove restrictions on the sale of E15, gasoline mixed with 15 percent ethanol, from May 1 to Sept. 15.

The agency said it would accomplish that by reinterpreting parts of the Clean Air Act. E15 would be held to the same fuel volatility standards as the 10 percent ethanol blends now sold year-round, the agency said in the 175-page proposal.

On renewable fuel credits, the agency proposed limits on how many of the credits a participant can hold, and a mandate to retire credits in the first three-quarters of a compliance year.

Participation would be limited for renewable credits for certain types of fuel, as would the amount of time certain participants could hold them.

Parties that aren’t obligated under the RFS, for instance, would have to sell or retire the same number of credits as they obtained in a quarter, the agency said.

EPA plans to hold a public hearing on the proposal March 29, the agency said.

Organizations supporting wider availability of E15 fuel praised the proposal and encouraged pro-E15 parties to help the agency craft a final rule that could stand up to court challenges.

“Time is of the essence, particularly since EPA insists on saddling the E15 rulemaking with controversial [renewable identification number] reforms that will need to be carefully reviewed to ensure they don’t undermine ethanol demand,” the American Coalition for Ethanol said in a statement. Renewable identification numbers, or RINs, are the credits in question.

The Fueling American Jobs Coalition, which has urged changes to the renewable fuel credits, welcomed EPA’s decision to combine the proposals and pressed the agency to take actions to increase market transparency and limit market speculation and manipulation. The coalition includes small refiners, union workers at refineries and small retailers opposed to ethanol mandates.

“The Coalition is pleased that EPA has adhered to the clear and unmistakable position articulated by the President that policy in this area must reflect a careful balance between the need to maintain jobs and investment in the vital refining sector and the desire of some in the biofuels sector to expand the use of higher blends of ethanol,” the group said in a statement.

Ethanol advocates said seasonal restrictions on E15 sales are the biggest stumbling block to making the fuel available at more gas stations than the roughly 1,600 that currently offer it. The restrictions are grounded in ozone-related rules at EPA, which require a waiver for sales in summer.

EPA undertook similar moves years ago to make E10, which is 10 percent ethanol, the year-round standard in most of the country. But organizations such as the American Petroleum Institute say the agency is on softer legal ground with E15 and have threatened to sue EPA.

E15 is a relatively cheap way to boost octane, supporters say, and most vehicles on the roads are designed to run on it.

While expanding sales of E15 is the ethanol industry’s top priority, revamping the renewable fuel credits is a top pursuit for refiners, who say they’re hurt financially when prices for the credits spike. Refiners that don’t blend ethanol are required to buy the credits, RINs, to demonstrate compliance with the RFS.

API said that it opposes both proposals and that Congress should scrap the RFS altogether. The changes to renewable fuel credits could increase costs for fuel producers, which could be passed along to consumers, API said.

Today’s proposal doesn’t guarantee that E15 will be available this summer, as the agency must complete final rules after a public comment period. The agency defines high-ozone season as June 1 to Sept. 15; the “regulatory control period” for fuel volatility rules at EPA begins May 1, the agency said.

But Trump has promised to make sales possible this summer, putting extra pressure on EPA Administrator Andrew Wheeler to deliver the final rule in time.

It remains unclear how quickly gas stations that don’t already sell E15 will add it to their pumps. In some cases, it would require new equipment, an investment that some companies haven’t been willing to make.

Gas stations in 30 states offer E15, according to the Renewable Fuels Association, a trade group. Beginning in 2016, more fuel terminals in Illinois, Arkansas and other states started making E15 available, paving the way for distribution to gas stations, the group said.

Critics launched campaigns to slow the fuel’s growth, pointing to potential damage to small engines in boats, motorcycles and garden equipment posed by ethanol.