The US Environmental Protection Agency formally proposed allowing year-round sales of gasoline with 15% ethanol on Mar. 12, a move which corn ethanol suppliers cheered and oil refiners condemned. It also proposed modifying parts of its Renewable Identification Number (RIN) program which it said would make the biofuel credits more transparent and deter price manipulation.
“Consistent with President [Donald] Trump’s direction, EPA is working to propose and finalize these changes by the summer driving season,” EPA Administrator Andrew Wheeler said. “We will be holding a public hearing at the end of this month to gather important feedback.” The hearing will start at 9 a.m. CST on Mar. 29 at the Ann Arbor Marriott Ypsilanti at Eagle Crest in Ypsilanti, Mich., EPA said.
The proposed rulemaking would allow E15 to be sold year-round without additional Reid Vapor Pressure (RVP) controls instead of during 8 wintertime months. “The 1-psi waiver allows gasoline-ethanol blends to have a higher RVP3 than would be allowed under [Clean Air Act Section] 211(h)(1) and the corresponding volatility regulations, which prohibit the RVP of gasoline from exceeding 9.0 psi during the summer,” it said.
“Currently, only blends of ethanol and gasoline containing at least 9% and no more than 10% ethanol by volume (E10) are granted the 1-psi waiver,” the proposed rulemaking noted.
It said that proposed RIN market reforms include:
- Prohibiting certain parties from being able to purchase separated RINs.
- Requiring public disclosure when RIN holdings exceed specified thresholds.
- Limiting the length of time a non-obligated party can hold RINs.
- And increasing the program’s compliance frequency from once annually to quarterly.
An American Petroleum Institute official immediately criticized EPA’s action. “Extending the sale of E15 gasoline to the summer months makes no sense,” API Vice President of Downstream and Industry Operations Frank J. Macchiarola maintained.
“Studies have shown that E15 gasoline can damage vehicle engines and fuel systems, potentially leaving Americans to pay expensive car repair bills due to bad policy out of Washington. In fact, nearly 3 out of 4 vehicles on the road today were not designed for E15,” he warned.
The decision also is contrary to federal law because the waiver conflicts with the clear language of the Clean Air Act (CAA), he continued. “Further, EPA has agreed numerous times that the agency does not have the authority to extend the Reid Vapor Pressure waiver to E15,” Macchiarola said.
EPA’s proposed RIN market changes, meanwhile, could increase fuel producers’ costs and increase prices for consumers, he warned. The proposed changes also move the goal posts for US energy companies which have already made capital investments and business decisions based on the current RFS program, Macchiarola said.
“The president asked EPA to give him a ‘win-win’ deal on the RFS, but this so-called deal only helps the ethanol industry, while exposing the driving public and owners of small power equipment to mis-fueling,” he stated. “Our industry plans to aggressively pursue all available legal remedies to protect consumers from this flawed policy.”
Sees a clear overreach
American Fuel & Petrochemical Manufacturers Pres. Chet Thompson was more succinct. “We oppose the EPA’s clear overreach of authority on this matter and doubt it will have the market effect the ethanol industry thinks it will,” he told OGJ in a Mar. 12 email. “If the EPA finalizes this rule, it will certainly be challenged in court.”
“Today’s proposed rule means EPA is one step closer to making good on President Trump’s promise to allow year-round sales of E15. With just 80 days left before the start of the summer driving season, finalizing and implementing the E15 regulatory fix remains a tall order,” said Renewable Fuels Association Pres. Geoff Cooper.
“That is why we have urged EPA to separate the year-round E15 provisions from the RIN reform provisions, and move forward as quickly as possible to finalize a practical and defensible year-round E15 solution,” he indicated.
The Fueling American Jobs Coalition (which was formed by union workers, small retailers, and independent refiners to find solutions to RFS problems) said EPA successfully struck a 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.
“It is incumbent now for the administration to finalize a rule with the right market reforms that limit speculation and manipulation without creating any unintended consequences for RFS obligated parties,” it said in a Mar. 12 statement. “The coalition looks forward to working with EPA on technical analysis, comments, and other participation in the rule-making process as the agency moves toward finalizing the rule.”
Contact Nick Snow at [email protected]