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EPA proposes E15 rule, RIN reforms

Ethanol industry cautiously optimistic final rule can be rolled out by June 1 summer driving season and RIN reforms don’t damage RFS.

On Tuesday, the U.S. Environmental Protection Agency proposed regulatory changes to allow gasoline blended with up to 15% ethanol (E15) to take advantage of the 1 psi Reid vapor pressure (RVP) waiver for the summer months that has historically been applied only to E10. EPA is also proposing regulatory changes to modify elements of the renewable identification number (RIN) compliance system under the Renewable Fuel Standard (RFS) program to enhance transparency in the market and deter price manipulation.

The rule has been months in the making after President Trump directed the EPA in October to initiate a rulemaking to expand waivers for E15 and increase the transparency in the RIN market. Expansion of year-round E15 access has been a priority for ethanol groups, especially as demand has hovered around the blend wall for 10% of total gasoline usage.

“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.”

Under the proposed expansion, E15 would be allowed to be sold year-round without additional RVP control, rather than just for eight months of the year.

The proposed rule would lift a nearly 30-year-old limitation on E15 that restricts sales to between June 1 and Sept. 15, and Tuesday’s announcement from EPA marks the first step in the rule-making process. EPA has committed to completing the rule-making process by June 1, 2019, the start of the summer driving season. Before finalizing the rule, the agency is now accepting comments from biofuel producers, farmers, and numerous other stakeholders.

“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,” Renewable Fuels Assn. president and chief executive officer Geoff Cooper said. “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.”

Cooper added, “With ethanol plants shutting down or idling and farmers experiencing the worst conditions in more than a decade, removing the summertime ban on E15 once and for all would send a desperately needed signal to the marketplace.”

EPA said the proposed reforms to RIN markets 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 compliance frequency of the program from once annually to quarterly.

Growth Energy CEO Emily Skor said the industry group is still reviewing details of the proposal. “We look forward to working with the EPA to ensure that any changes – particularly in the RIN market – do not upend the marketplace and continue to encourage investment in E15 and other higher ethanol blends,” she said in a statement.

Brooke Coleman, executive director of the Advanced Biofuels Business Council, added,Year-round E15 means stronger markets for struggling farmers, and it opens vital new possibilities for advanced and cellulosic biofuels. Now, the real test begins. Rural communities are counting on the Administration to get this done, but a variety of oil industry stakeholders will be looking to leave their mark on new RIN market guidelines. The EPA must ensure the final rule preserves a level playing field for those delivering cleaner, more affordable biofuel blends to consumers.”

Sen. Chuck Grassley (R., Iowa), who had been central in the White House discussions on finding a solution for E15 as well as defending ethanol in any RIN reform proposal, said he has some concerns about certain details about the plan, but said it is a significant step in the right direction.

“Ending the nonsensical ban on summertime sales of higher blends of ethanol is a no-brainer and a big victory for Iowa, Midwest farmers and the country as whole," Grassley said. "Allowing year-round sales of higher blends of ethanol fits in well with President Trump’s mission to end bureaucratic red tape, create jobs in rural America and establish American energy dominance through increased domestic production. The final rule should reflect those goals in keeping with President Trump’s commitments.”

EPA welcomes public comment on the proposal and intends to hold a public hearing on March 29. Additional details on the comment period and public hearing will be available shortly, EPA said in a statement.

TAGS: Policy
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