Ethanol industry says: "We shall overcome"
Des Moines, IA -- The ethanol industry can overcome two recent adverse court decisions that restrict the use of ethanol blends in gasoline, but it will take legislative and regulatory actions to do so, according to ethanol industry leaders who spoke at the Fuel Ethanol Workshop & Expo (FEW) held Tuesday through Thursday at the Iowa Events Center here.
The first of the two court decisions concerned a June 25 U.S. Supreme Court ruling that small refinery exemptions (SREs) to ethanol blending requirements in the Renewable Fuel Standard (RFS) can be extended, even if their exemptions obtained earlier had lapsed.
The second was a July 2 ruling by the D.C. Circuit Court of Appeals that threw out a 2019 rule issued by the Trump Administration’s Environmental Protection Agency (EPA) that lifted restrictions on the summertime sale of gasoline that contains a 15% blend of ethanol (E15).
In remarks that opened the 2021 FEW, Renewable Fuels Association (RFA) President and CEO Geoff Cooper said that, despite the two recent disappointing court decisions, “The ethanol industry is still in a stronger position today than we’ve been in for years. Our outlook remains bright, despite what the headlines and our opponents would like us to believe.”
For example, Cooper said, the Supreme Court decision to uphold the SRE extensions did not address the regulation that refiners asking for an exemption must prove that the economic hardship they claim is caused only by the RFS. Nor did the Supreme Court decision impact the ability of refineries of all sizes to pass along the costs of purchasing Renewable Identification Numbers (RINs) to the purchasers of their refined products. “It will be next to impossible for refiners to establish that the RFS itself has harmed them,” Copper said, noting that EPA has indicated its agreement with the 10th Circuit Court’s decision.
Regarding the D.C. Circuit Court’s decision regarding year-round E15 sales, Cooper said he expects that E15 will remain available during this summer driving season while appeals of the decision are heard. “But what about next summer and every summer after that?” he asked. “RFA is considering all available options to protect and expand the market for E15. In addition to pursuing a rehearing in the D.C. Circuit or an appeal to the Supreme Court, EPA could explore other potential regulatory workarounds that would allow retailers to continue selling E15 all year long.”
There is strong, bipartisan support for ethanol in Congress, the White House, and the EPA, Cooper stated. “Renewable fuels continue to enjoy strong support from both political parties and in both chambers of Congress,” he said.
Chris Bliley, senior vice president of regulatory affairs for Growth Energy, said Thursday in a panel discussion on regulatory and legislative issues facing ethanol industry that the two court decisions were “certainly disappointing” and represented a setback for the ethanol industry.
But, Bliley said, although the Supreme Court took away one pillar in the ethanol industry’s challenge to SREs, there are still several things that refineries have to do to prove that the RFS represents an economic hardship for them. Some of the SREs are being requested by the world’s largest oil companies, he noted, and it’s going to be difficult for those large companies to show economic hardship.
The ethanol industry also has support in the White House, Bliley stated. “President Biden was pretty specific on the campaign trail that he thought the SREs were overdone,” he said. There are indications that the Biden Administration’s EPA won’t approve as many SREs as did the EPA under the Trump Administration. However, he added, there is political support for granting SREs in some northeastern states, including Biden’s home state of Delaware, where many oil refineries are located.
As for the 10th Circuit Court of Appeals decision on the E15 waiver for summer driving, Bliley echoed Cooper’s statement that the decision won’t cover sales of E15 this summer. “I think we feel very optimistic for this summer,” he said of E15 sales. “It’s next summer’s sales of E15 that could be impacted.”
Bliley noted that the 10th Circuit Court decision impacts conventional gasoline markets but doesn’t cover some large gasoline markets such as Chicago, Dallas/Ft. Worth, and many northeastern states where E15 can still be sold year-round without a problem. E15 is currently sold at 2,450 retail fuel sites in 30 States, he said.
Legislative relief for E15 also might be on the way.
On July 14, the bipartisan Consumer and Fuel Retailer Choice Act was introduced in the U.S. Senate by Deb Fischer (R-Neb.), Amy Klobuchar (D-Minn.), and Tammy Duckworth (D-Ill.). The measure seeks to ensure the year-round availability of E15 in all fuel markets. Similar legislation also has been introduced in the U.S. House of Representatives.
Growth Energy, the RFA, and the American Coalition for Ethanol all have signaled their support for the bill.