On March 12, EPA proposed regulatory changes to allow E15 to be sold year-round.  In 2011, EPA permitted E15 use outside the summer period for light-duty conventional vehicles such as cars, trucks and SUVs of model year 2001 and newer, but the summer ban was maintained for air quality control during the summer months, and restrictions were maintained for older cars and light duty trucks as well as for off-road vehicles and small engines like those powering lawnmowers and motorcycles, as well as for boat engines. By definition E15 is finished motor fuel containing between 10.5 to 15 percent ethanol.

The partial year use restriction has been viewed as a deterrent to the widespread use of the fuel as it complicates inventory management and adds regulatory complexity to fuel marketing.  Marketing of E15 also requires investments in infrastructure such as dedicated underground storage tanks and new fuel pumps. Given these constraints, and the short time frame between EPA’s issuing of the rule and the 1 June deadline, the expected approval of a the final regulation allowing E15 use is not expected to have a major impact on total ethanol consumption during the 2019 summer driving season.

However, certain states in the Corn Belt have developed E15 infrastructure in recent years and higher ethanol blending during the summer is likely there.  For example, Minnesota leads the nation in E15 use.  According to data from the Minnesota Department of Commerce, 2018 E15 use in the state hit 54 million gallons, up from 19 million gallons in 2017.  About 9.2 million gallons of that gain in 2018 over year prior totals came during the summer driving season.  EPA had previously relaxed the summer ban allowing certified flex fuel vehicles to use E15 in the summer.

The proposed rule will be subject to a public comment period. The comment period deadline is April 29.  After that, EPA must review the submitted comments before and gain clearance for its final rule to the Office of Management and Budget (OMB) Office of Intergovernmental and Regulatory Affairs (OIRA) before the new regulations would go into effect.

Given this process, there is a very tight deadline to complete the rule before the June 1 deadline.  The E15 clearance process has been in the works since October 2018 when President Trump directed EPA to approve the year-round use of the fuel.

Once the rule is finalized, it is expected to face legal challenges from the petroleum industry and also some environmental groups.  This could further delay implementation.

At issue is the Clean Air Act’s (CAA) restriction on a fuel’s evaporative volatility as measured by Reid vapor pressure (RVP).  Opponents note that section 211 (h)(4) of the CAA specifically limits summertime RVP waivers to gasoline blends containing between 9-10 percent volume ethanol and will likely challenge the rule on the grounds that any change accommodate E15 blends can only be made by Congress, not EPA, as the agency lacks the statutory authority to do so.  In the rule, EPA is proposing to “modify” and “clarify” its “interpretation of CAA sec. 211(h)(4). Second, we are proposing a regulation.”

EPA’s proposal also includes proposed reforms to the Renewable Identification Number (RIN) credit trading system to the reduce volatility RIN prices, including:

  • 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
  • Increasing the compliance frequency of the program from once annually to quarterly

Petroleum industry groups also oppose these reforms.

These proposals from EPA come as the final year-end numbers for 2018 show that ethanol use was down about 5 percent from 2017.  This is the first year-on-year decline since 1998 and is largely attributable to the EPA’s granting of small refinery exemptions.

Overall, in 2017, the national average ethanol blend rate was 10.13 percent. In 2018, it was down to 10.07 percent.  Indeed, during his comments to the NCC’s Annual Conference in Washington, D.C. last October, then-acting EPA Administrator Andrew Wheeler cast the E15 rule as a way to offset the losses of ethanol utilization attributable to the granting of SREs.

Submitted by Dave Juday of The Juday Group, NCC Consultant