Biden Administration Sees Year-Round Sales of Higher Ethanol Fuel by 2024

April 20, 2023

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by Leah Douglas and Stephanie Kelly (Reuters) A U.S. plan for year-round sales of a fuel blend with more ethanol known as E15 in eight Midwestern states will likely go into effect in summer 2024, a year later than the states sought, the top U.S. environment regulator told lawmakers on Wednesday.

Considering the move to help lower gas prices, the Environmental Protection Agency (EPA) studied if it could make the change this summer but concluded there was not enough time for final rule-making, EPA Administrator Michael Regan told the House Agriculture Committee.

Regan added that the agency will consider issuing a temporary emergency waiver to allow sales of E15 this summer.

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The EPA prevents summertime E15 sales because of concerns it contributes to smog in hot weather. Research has shown that E15 may not increase smog more than E10, which is sold year-round and contains 10% ethanol.

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Both industries have said they prefer a nationwide policy allowing E15. READ MORE

U.S. Plans Year-Round Sales Of Higher Ethanol Fuel Next Year (OilPrice.com)

Regan defends EPA in House Ag hearing (Agri-Pulse)

Regan Demurs on E15 (Politico)

Regan discusses E15 waivers, biomass-based diesel RVOs at hearing (Ethanol Producer Magazine)

EPA Administrator Grilled on Summer E15 (Energy.AgWired.com; includes AUDIO)

FARM-STATE LAWMAKERS PROD EPA CHIEF ON BIOFUELS AND WOTUS (Successful Farming)

EPA ADMINISTRATOR SAYS HE’S COMMITTED TO BIOFUELS (Brownfield Ag News)

Midwestern leaders want to sell ethanol in summer despite smog risks (Grist)

Ethanol groups call on EPA to implement Midwest E15 petitions now (Ethanol Producer Magazine)

FARM-STATE LAWMAKERS PROD EPA CHIEF ON BIOFUELS AND WOTUS (Successful Farming)

RFA to EPA: Don’t Wait Until 2024, Implement Governors’ Request on Year-Round E15 Now (Renewable Fuels Association)

Excerpt from Ethanol Producer Magazine:Numerous lawmakers, including Reps. Mike Bost, R-Ill.; Dusty Johnson, R-S.D.; Tracey Mann, R-Kan.; Randy Feenstra, R-Iowa; Zach Nunn, R-Iowa; and Angie Craig, D-Minn., pressed Regan on delays associated the year-round E15 petitions submitted by eight Midwest governors and the potential for a nationwide emergency waiver allowing E15 to be sold during the summer 2023 driving season.

Regan said his agency has taken the waiver requests filed by the eight Midwest governors very seriously but was unable to ramp up the rulemaking in time to implement a rule ahead of the 2023 summer driving season. He cited concerns over “a significant disruption in consumer pricing” if the EPA moves too quickly as one reason the agency has proposed to delay the effective date of those waivers from summer 2023 to summer 2024. He also noted that the EPA feels confident that the rulemaking will be complete in time for the summer 2024 driving season.

When asked by Johnson about legislative efforts to allow year-round E15 nationwide and whether he believed that allowing year-round sales of E15 would be good policy, Regan said he couldn’t speak to the policy aspects of the question. He did note, however, that the EPA would like to provide technical assistance to any legislative efforts to allow year-round sales of E15. He said that technical analysis and modeling done as part of the Midwest E15 petition would also have to be completed for other states as part of the agency’s implementation of a legislative E15 fix. Similarly, Regan said that any additional states that choose to join the eight Midwestern states in allowing year-round sales of E15 would likely be subject to a rulemaking process similar to the one currently in progress.

During his testimony, Regan also provided some background on the EPA’s caution in moving too quickly with regard to E15 waivers. Specifically, he cited the example of the previous administration’s efforts to implement a year-round E15 waiver that was unable to hold up to a court challenges.

Regarding the potential for an emergency E15 waiver for the summer 2023 driving season, Regan indicated that no decision has yet been made. He repeatedly said that his staff is continually monitoring the situation. To date, however, EPA staff has been unable bring him the level of evidence that he needs to issue an emergency waiver. He explained that the regulatory setting for issuing an emergency waiver is very prescribed. Conditions on the ground at a certain time must meet certain thresholds he said. While many of the factors that made the issuance of an emergency waiver appropriate last year are still in place, Regan indicated that the threshold is not yet high enough to issue the waiver. His testimony implied that some factors identified last year by the U.S. Department of Energy that were integral to issuing the waiver are not currently being identified by that agency.

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EPA may take more favorable action with regard to pending biomass-based diesel RVOs. Reps. David Scott, D-Ga., Bost and Craig were among the lawmakers that pressed Regan on the low proposed RVOs for biomass-based diesel in the pending RFS “set” rule, which is expected to set RVOs for 2023, 2024 and 2025.

Regan said the EPA has received a lot of new data regarding biomass-based diesel production capabilities as part of the RVO rulemaking’s comment period. “I can assure you that we’ve met with a number of stakeholders that have offered us a lot of new data, and we believe that will be reflected in the final rule,” he said. He added that the agency is going to “make adjustments based on [public comments] and come out with a very strong final rule.”

Regan also responded to a range of criticism over the EPA’s recently released tailpipe GHG emissions standards. That criticism focuses on the agency’s decision not to consider the role of biofuels as a tool to reduce tailpipe emissions within that proposed rule. Regan said the agency doesn’t see that rule as alienating agricultural or rural communities. Rather, he said the agency is working to implement complimentary policies that will help drive us to a low carbon future. “We see a tremendous market for biofuels that is complementary to the EV fuels future,” he said.

In particular, Regan repeatedly stressed the EPA’s support for biobased sustainable aviation fuels (SAF).

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A full replay of the hearing is available on the House Agricultural Committee website. READ MORE

Excerpt from Energy.AgWired.com: In response to questioning by Rep. Mike Bost (R-IL), Regan said the agency just did not have enough time to allow the eight states who requested a waiver for E15 to be able to sell it this summer. “We took that request very seriously, we tried to ramp it up in a timely fashion to have 2023 included, but we’re probably not going to be able to do that,” Regan said.

Regan told Rep. Dusty Johnson (R-SD) why they would not get it done for this summer in those eight states. “Because there would be a significant disruption in consumer pricing and the like if we move too quickly in 2023,” Regan said. “We feel confident that E15 being sold year round will be ready to go in 2024 – 2023 is a little too soon for that rule making.”

The administrator said in order to grant the waivers for the eight states – Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin – EPA has to do an air quality modeling analysis to determine whether or not E15 would “have any adverse impact,” despite the fact that E15 has been sold in the summer months nationwide for the past three years.

Rep. Derrick Van Orden (R-WI) took Regan to task for delaying the decision on the eight state waiver, and for not making the decision to allow E15 this summer. “It’s because of your agency’s inability to do your job in a timely manner,” said Van Orden. “It constitutes a crisis for our farmers and other consumers.”

“Use the empiric knowledge that you gathered to get this waiver to use E15 year round, use the same information because it hasn’t changed, so that we can use E15 this year,” Van Orden added. “If the conditions were the exact same as they were last year when I was administrator, I would have issued that E15 waiver,” Regan responded.

Democrat Rep. Angie Craig of Minnesota also weighed in on the E15 situation, asking if the administration would take action in time for the summer driving season, but getting a non-answer from the administrator. “We haven’t taken anything off the table and the E15 waiver is being looked at as a potential tool for this summer in addition to the longer term strategy around our response to the eight governors for a year round E15 waiver for those states in 2024,” said Regan. READ MORE

Excerpt from Ethanol Producer Magazine: In its comments on the Midwest E15 proposed rule, the Renewable Fuels Association urged the EPA to impellent the rulemaking now rather than waiting until 2024. “There is no economic, environmental, or legal justification for the Agency to defer implementation another year,” wrote Geoff Cooper, president and CEO of the RFA. “If there is any problem with implementing the governors’ requests this summer, it is one of the administration’s own making, which is not a legitimate reason for further delay.”

Cooper pointed out that because the original governors’ petition requesting year-round E15 was submitted in April 2022, EPA had a legal duty to approve and implement it by the end of July of last year. Even though the law clearly establishes a 90-day deadline for implementing a petition from governors, “the administration did not act on the petition for nearly a year, and now EPA is using this delay as an excuse to defer implementation for another year. This is creating considerable uncertainty in the marketplace and putting at risk hundreds of millions of dollars of infrastructure investment by fuel retailers, ethanol producers, the U.S. Department of Agriculture, and other stakeholders.”

Cooper also stressed that the EPA did not demonstrate that implementing the year-round E15 regulation this summer would cause an insufficient supply of gasoline in the petitioning states, noting that an insufficient supply is the only permissible justification for delaying implementation. He also indicated that the EPA has mischaracterized RFS-commissioned studies that show implementation of the governors’ request in 2023 is expected to be manageable, and said any difficulty in implementing the regulation this summer would likely be a result of the EPA’s lengthy delay in responding to the governors’ petitions.

Growth Energy told EPA that implementing the Midwest E15 petitions now would extend access to cleaner, more affordable biofuel blends. “For motorists, the value proposition of E15 is clear,” wrote Chris Bliley, senior vice president of regulatory affairs at Growth Energy. “It gives consumers an additional choice at the pump that allows an additional pathway to market for homegrown ethanol.”

In the letter, Bliley also highlighted E15’s advantages in terms of enhancing U.S. energy security and decreasing volatility in the American fuel market. “Reliance on petroleum energy sources can lead to substantial swings in fuel prices, as seen during the 2022 summer driving season as prices skyrocketed in response to the Russian invasion of Ukraine, inflation, and other factors,” he said. “During this period, E15 provided consumers with a significantly lower-cost fuel option at the pump, with savings of $0.16/gallon nationwide and up to $0.96/gallon in certain locations. If E15 were to replace E10 on a nationwide basis, consumer spending on motor fuel would decrease by $20.6 billion.”

The American Coalition for Ethanol also called on the EPA to take swift action to implement the governors’ petitions. While ACE appreciates EPA finally taking action on the governors’ petitions, CEO Brian Jennings explained if EPA chooses not to implement the rule in 2023, the agency’s “legally questionable delay to 2024 will force millions of people in conventional gasoline areas of the U.S. to pay much more at the pump during this year’s summer driving season – on the heels of last year’s record-high gasoline prices and continued inflationary pressure on American families.”

With the sense of urgency about the fast-approaching June 1, 2023 summer driving season and market access for E15 in all areas of the country, including conventional gasoline areas, Jennings urged the agency to take emergency action in ACE’s comments. “Given the pressing need for consumers in conventional gasoline areas of the country to have access to the lowest-cost fuel available to most vehicles on the road this summer, we strongly urge EPA to take emergency steps pursuant to Section 211(c)(4)(C)(ii) to allow E15 for the 2023 summer driving season, similar to the steps taken by yourself and President Biden last year.”

“The conditions used by the administration to justify invoking this emergency statutory authority last year persist today – in fact some market indicators are more concerning today,” Jennings added.

ACE’s comments argue how EPA’s proposal favors refiners and their “anticompetitive behavior” over consumers, retailers and the environment.

Jennings concluded by reiterating if there are real concerns related to the gasoline supply chain relative to a 2023 implementation date, they are problems of EPA’s own making. “…if the agency had responded to the eight petitioning states within the statutorily required 90 days there would be no need to fret about refiner concerns with timing.”

Jennings added, “EPA should balance the interests and side with consumers, retailers and the environment instead of refiners by finalizing a regulation removing the volatility waiver in these states for the 2023 summer driving season, consistent with the governors’ 2022 request and the statute.” READ MORE