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E15 Faces More Speed Bumps

EPA’s rule for year-round E15 sales is still not in Federal Register.

When President Donald Trump told a campaign rally in Council Bluffs, Iowa, last month that his administration will approve year-round sales of E15, farmers and the ethanol industry were pleased.

They looked forward to more sales of the gasoline blend with 15% ethanol as early as next summer.

Now, reaction to that long-sought expansion of the ethanol market is tempered by bureaucratic and industry realities.

Trump’s October 9 announcement “was obviously very good news,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association. At the time, Shaw thought that he soon would see a new EPA rule for year-round E15 published in the Federal Register.

“I was expecting to see that in October or November,” he recently told Agriculture.com. Instead, the EPA has promised to issue a proposed rule in February. That would be followed by at least 30 days of seeking comments from affected industries, then tweaks by EPA with a final rule in place by the end of next May.

Shaw emphasized that he’s not criticizing the EPA, which administers Clean Air Act regulations affecting ethanol.

“We want them to be successful,” he said.

Yet, a four-month time line for a federal bureaucracy to write rules is considered breathtaking speed, perhaps a record. Industries often ask for comment periods to be extended, and no one will be surprised if oil companies do exactly that.

Others have been blunt in criticizing EPA.

When asked about the EPA time line recently, Senator Charles Grassley (R-IA) told reporters, “EPA ought to speed it up or otherwise, it’s going to look like the president wasn’t serious in his announcement in Council Bluffs.”

Grassley told Agriculture.com last week that he believes the EPA’s rule allowing year-round E15 sales needs to be in place by this winter in order to allow gasoline retailers time to install pumps to dispense the fuel during next summer’s driving season.

Currently, gas stations can’t sell E15 to many vehicles during the summer due to restrictions on smog-inducing vapors from the fuel in some gasoline markets. E10 (blends with 10% ethanol) already have an exemption from that Reid Vapor Pressure restriction.

The new rule would apply it to E15, as well. (There’s little vapor pressure difference between the two fuels and E15 may be slightly cleaner.) Flex-fuel cars and trucks that can burn up to 85% ethanol can buy E15 all year, but that’s a limited market that has made E15 less attractive to some retailers.

Currently more than 2,000 gas stations in the U.S. sell E15, even with the restrictions on sales during the summer, Shaw said.

If EPA doesn’t meet its May deadline, those stations already selling E15 would get “an immediate boost” in sales if an E15 vapor pressure waiver is still approved sometime this summer, Shaw said.

Still, what the industry really wants is certainty and a less-restricted market that would encourage more retailers to sell E15. Stations now offering it account for less than 2% of all outlets.

Eventually, if E15 has the same success with consumers as E10, some in the industry have estimated that E15 could boost demand for corn by 2 billion bushels.

That won’t happen overnight. Big oil companies no longer own many gas stations but they have supply contracts with about half of all U.S. retailers, Shaw said. Many of those contracts prohibit sales of E15.

Another potential barrier could be legal. Even when the EPA gives final approval to year-round E15 sales, technically with a waiver from Clean Air Act rules, lawsuits are likely.

On the day Trump announced his support for year-round E15, the American Petroleum Institute said in a statement that the “industry plans to aggressively pursue all available legal remedies against this waiver.”

Shaw is skeptical that a court would block E15 immediately. Changes in the E15 rule have been considered for about seven years, he said. He believes the oil industry would have a tough time convincing a court that it would be harmed enough to get the rule temporarily blocked while litigation proceeds.

“I think the chances of them getting a stay are minimal,” Shaw said.

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