EPA Finalizes E15 Rule Agency Leaves Potential Biofuel Credit Reforms on Table for Later Time

June 02, 2019

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by Todd Neeley (DTN Progressive Farmer) EPA beat the clock in finalizing year-round E15 on Friday, one day ahead of the beginning of the summer driving season. The agency announced a final rule that also takes a much softer approach on reforms to the biofuel credits market than what was originally proposed.

The rule lifts the restriction placed on year-round sales of E15 through the summer months in some regions of the country. Those restrictions have been in place from June 1 to Sept. 15.

EPA Assistant Administrator for Air and Radiation Bill Wehrum said in a briefing on Friday the agency believes the rule is legally defensible and will expand the market for ethanol in the long run.

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The American Petroleum Institute indicated in the weeks leading up to the final rule that it would file a lawsuit, although EPA is not mandating the sale of E15.

A spokesman for API told DTN it does not have a timeline for expected legal action.

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In the proposed rule, the EPA explored the possibility of five different reforms to the Renewable Identification Numbers, or RIN, market in response to concerns about potential market manipulation.

Obligated parties to the RFS, including refiners and others, are allowed to buy RINs or blend biofuels to comply with the law.

Wehrum said it has not taken all of the possible reforms off the table as of yet.

"First, we wanted to do no harm," he said. "We've looked at the market very closely. So far, we've not found clear evidence that there is any market manipulation. We think it is prudent to move in this direction."

EPA will require obligated parties to the Renewable Fuel Standard to publicly disclose when their separated D6 (corn ethanol) RIN holdings exceed certain thresholds. In addition, EPA is setting reporting and record-keeping requirements to help the agency enhance its market monitoring capabilities.

Eliminated from the proposed rule are reforms related to RIN retirement compliance, who can purchase RINs and limits on how long non-obligated parties can hold D6 RINs.

Frank Maisano, a senior principal at Bracewell LLP who represents refining interests, said the RIN reform does little to address refiners' concerns about the market.

"This transparency alone is not enough," he said. "If the RINs train is capable of running you over, seeing it run you over is cold comfort."

In a joint statement, NATSO, the national association representing truck stops and travel plazas; the National Association of Convenience Stores; and the Society of Independent Gasoline Marketers of America said the reforms are welcomed.

"We are still analyzing the rule, but at first glance, we are pleased that EPA appears to have hit the sweet spot here by reasonably enhancing disclosure requirements without altering market participants' behavior," they said. READ MORE

EPA Hits Sweet Spot in RFS Reform, Fuel Retailers Say (PR Newswire/NATSO)

EPA Issues Final Rule on RFS Reform (NATSO)

EPA Gives Final Approval to Year-Round E15 Sales (Convenience Store News)

E15 Rule Finalized in Time for Summer Sales--EPA issues final rule on year-round sales and RIN market reforms (CSP Daily News)

TRUMP ALLOWS FOR EXPANDED ETHANOL SALES AS CHINESE TARIFFS SQUEEZE FARMERS (The Daily Caller)

EPA finalizes rule to allow year-round E15 (Biofuels Digest)

Trump lifts year-round ethanol restrictions, could lower gas prices (Fox Business; includes VIDEO)

US EPA lifts E15 ban as summer driving season starts, but lawsuits loom (S&P Global Platts)

Ethanol Report on Year Round E15 (Energy.AgWired.com; includes AUDIO)

YEAR-ROUND E15 ANNOUNCEMENT COINCIDES WITH GRAND OPENING OF NEW IOWA ETHANOL PLANT (Brownfield Ag News)

Trump lifts curbs on E15 gasoline to help farmers, angering Big Oil (Reuters)

ETHANOL GROUPS WELCOME YEAR-ROUND E15 (Brownfield Ag News)

EPA finalizes E15 rule with limited RIN changes: Update (Argus Media)

EPA ends E15 restrictions ahead of deadline (Agri-Pulse)

EPA Finalizes Rule on E15 and RIN Reform--Removing a barrier to year-round E15 sales gives retailers more flexibility in offering renewable fuels. (National Association of Convenience Stores)

Year-round sales of gasoline mixed with 15% ethanol OK'd (Associated Press/Houston Chronicle)

Overnight Energy: Trump allows use of ethanol gas in summer (The Hill)

NEW RULE COULD MEAN YOU PAY LESS AT THE PUMP (KIMT; includes VIDEO)

EPA opens up sales on higher ethanol content gasoline, in blow to refineries (MRT/Midland Reporter Telegram)

Year-round E15 helps consumers, farmers (Wisconsin State Farmer)

Trump Caves To King Corn Yet Again (Hot Air)

Adding Fuel to the Fire: If an expected federal rule change happens, E15 fuel will be far more prevalent at the pump this summer (Soundings Online)

Elite Octane Celebrates Opening and E15 (Energy.AgWired.com)

An Ethanol Sop to Farmers: The EPA allows E15 blends in the summer to offset tariff damage. (Wall Street Journal)

Even with New Reforms, the RFS is a Costly Policy (American Action Forum)

New rule could boost 2019 ethanol sales (E&E News Greenwire)

Casey's stores to add E15 fuel pumps after EPA lifts ban (The Gazette)

RFA discusses future impact of E15 rule (Ethanol Producer Magazine)

NBB Welcomes E15 Rule (National Biodiesel Board)

EPA Approves Year-Round E15 (AgWeb)

Letters: 'Trump kept his promise to farmers on year-round ethanol'; 'We need renewed interest ag economy' (Nonpareil Online)

Higher ethanol gasoline allowed year-round, but not sold in many places (Columbus Dispatch)

EPA finalizes E15 rule, steps back approach to RIN market reform (Biodiesel Magazine)

EPA Issues Rule to Create Transparency, Prevent Manipulation of RINs Market (Transport Topics)

Long-term E15 availability expected to spur demand, markets (AgriNews)

Local farmers excited consumers can buy E-15 gasoline all year (KCTV5)

As Trump Touts Ethanol, Scientists Question the Fuel's Climate Claims (Inside Climate News)

Excerpt from PR Newswire/NATSO: NATSO, the national association representing truckstops and travel plazas, the National Association of Convenience Stores (NACS) and the Society of Independent Gasoline Marketers of America (SIGMA), the trade associations representing the fuel retailing community in the United States, today commended the Environmental Protection Agency (EPA) for finalizing only those aspects of its RIN Market Reform Proposal that enhance disclosure requirements.

The final rule, which also allows for the sale of E-15 year-round throughout the United States, sets aside certain proposals that would have reduced the incentives for fuel retailers who buy, sell and blend renewable fuels.

"We are still analyzing the rule, but at first glance we are pleased that EPA appears to have hit the sweet spot here by reasonably enhancing disclosure requirements without altering market participants' behavior," the trade associations said in a joint statement. "We appreciate that EPA chose not to promulgate unnecessary regulations that came with a high likelihood of unintended, counterproductive consequences."

EPA initially had proposed a number of reforms that would have reduced the incentives for retailers to continue buying, blending and selling renewable fuels. In comments filed with EPA as part of the rulemaking process, the fuel retailing groups opposed those reforms, which would have disrupted the market.

They did not object to the sale of E-15 year-round, nor did they oppose enhanced disclosure requirements.

The trade associations are pleased that the agency's final rule ensures that fuel marketers continue to have a strong incentive to incorporate renewable fuels into the fuel supply.

About NATSO, NACS, and SIGMA

NATSO is the trade association of America's travel plaza and truckstop industry. Founded in 1960, NATSO represents the industry on legislative and regulatory matters; serves as the official source of information on the diverse travel plaza and truckstop industry; provides education to its members; conducts an annual convention and trade show; and supports efforts to generally improve the business climate in which its members operate.

NACS advances the role of convenience stores as positive economic, social and philanthropic contributors to the communities they serve. The U.S. convenience store industry, with more than 153,000 stores nationwide selling fuel, food and merchandise, serves 165 million customers daily—half of the U.S. population—and has sales that are 10.8% of total U.S. retail and foodservice sales. NACS has 1,900 retailer and 1,800 supplier members from more than 50 countries.

SIGMA represents a diverse membership of approximately 260 independent chain retailers and marketers of motor fuel. Member retail outlets come in many forms including truckstops, traditional "gas stations," convenience stores with gas pumps, cardlocks, and unattended public fueling locations.

Together, NATSO, NACS, and SIGMA represent approximately 90 percent of retail sales of motor fuel in the United States. READ MORE

Excerpt from Fox Business: Since ethanol is cheaper to produce than gasoline, for some motorists it could bring down prices at the pump, which were at about $2.82 per gallon as of Friday afternoon, according to AAA. Last year at this time, the average price of gas was $2.95.

"The year-round approval of E15 will mean another outlet for corn growers, and lower prices for consumers that want to fill up with E15, which is generally offered 5 to 10 cents per gallon lower than E10 gasoline," Patrick DeHaan, a senior petroleum analyst at GasBuddy, told FOX Business. DeHaan noted, however, that E10 is the default regular fuel sold across most of the country.

Lifting the ban has been opposed by oil refiners.

The announcement comes as farmers have been voicing concerns over a growing trade war between the White House and China, which has featured tit-for-tat tariff implementation. It also comes one day after the president threatened to impose 5 percent tariffs on goods from Mexico. READ MORE

Excerpt from Columbus Dispatch: The Trump administration recently lifted a U.S. Environmental Protection Agency banning summer sales of gasoline containing 15% ethanol, partially to help corn farmers sell more product for ethanol production. Historically, that fuel blend has been banned when temperatures are hotter because of the higher evaporative emissions as the gas is dispensed from pumps. Those emissions lead to ozone and smog.

“Ethanol is a very clean-burning fuel. It’s the evaporative emissions that are the issue. That has nothing to do with what comes out of the tailpipe,” Tyner (Wally Tyner, a professor of agricultural economics at Purdue University) said. “When you put the fuel in your tank and you see those vapors rising from the nozzle during hot weather, that’s what they’re talking about.

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“Long term, if everything were to go to E15, there would be some higher evaporative emissions,” he said. “The oil industry would have lost some of their market and the ethanol industry would have gained a little market.”

As a result, the move to allow a higher ethanol mix in fuel has resulted in some intriguing political alignments putting environmentalists and the petroleum industry on the same side.

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The U.S. Environmental Protection Agency has approved the use of E15 fuel in car models 2001 and newer. However, only some newer car models are warrantied to run on E15.

“The argument is that even if the car is not designed to run on E15, in many cases it can. The warranty remains an open question. However, most cars five years or older are beyond the warranty stage anyway,” Tyner said.

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Tyner said the move to remove the three-month ban is more of a political victory.

“It doesn’t matter how much E15 gets sold because the industry is saying, ‘We got it. We won,’” he said. “And the president is saying, ‘I gave it to you.’ So politically they’ve scored their points.” READ MORE