Oral Comments for Fuels Regulatory Streamlining Rule Public Hearing

by Trevor Hinz (Urban Air Initiative) Good morning, my name is Trevor Hinz, and I am the Director of Urban Air Initiative, Inc., a non-profit focused on developing cleaner fuels to reduce harmful gasoline-related air pollution.
I would like to start by praising the rule’s commendable goal of reducing red tape and updating outmoded regulations. Everyone benefits when businesses can devote more of their resources to meeting the needs of their customers, instead of the needs of regulators.

Unfortunately, the proposed rule falls short of its commendable goal, because it fails to remove counterproductive red tape for fuel retailers in my home state of Kansas and elsewhere. Let me explain.

For well over a decade, fuel retailers have been safely using blender pumps to sell mid-level ethanol blends like E20 and E30 for use in flex-fuel vehicles. EPA expressly approved this practice in 2006, telling fuel retailers that “blends such as E20 and E30 for use in FFVs . . . are covered under the emissions certification for an E85 FFV, and thus are not prohibited under the Clean Air Act.”1

But more recently, EPA has ignored its prior guidance and cast doubt on the legality of using blenderfpumps to make mid-level blends. In 2014, EPA first erroneously asserted that mid-level blends are regulated “gasoline” under its fuel quality regulations.2 Two years later, EPA took a step further and asserted that retailers who dispense mid-level blends are gasoline “refiners” under its regulations.3 While EPA proposed regulations that would have fixed the problem, it has never adopted those rules.4

The result is that, under EPA’s view of the law, fuel retailers would be subject to enormous compliance burdens designed for full-fledged refineries. For example, refiners must sample and test each batch of gasoline they sell for compliance with EPA’s fuel quality standards, but each refinery batch amounts to tens of thousands of gallons. By contrast, retailers sell just about a dozen gallons of fuel per customer.

As EPA has acknowledged, requiring retailers to sample and test mid-level blends each time a customer fills a vehicle fuel tank is impractical—indeed, it is completely unworkable. It is also pointless, because mid-level blends made with certified gasoline and denatured fuel ethanol are guaranteed to have lower sulfur, benzene, and volatility levels than the E10 they displace from the market, improving the quality of gasoline.

Regulating retailers as if they were refiners through improvised and strained interpretations of the law is nonsensical and unfair to retailers who relied on EPA’s past guidance to invest in blender pumps.

Imagine a traffic cop told you it was ok to cross the street, and then threatened you with enormous fines once you got to the other side. That is what EPA has done here, but on a much larger scale.

To resolve this problem, Urban Air Initiative, along with other partners, has filed an administrative petition asking EPA to fix the problem it created through its erroneous interpretation of gasoline, and it has also sued in court.5 EPA could resolve this problem by interpreting the current definition of gasoline to exclude mid-level blends used in flex-fuel vehicles, or by finalizing the reforms it proposed in 2016. It should stop kicking the can down the road.

But instead of fixing the problem, the proposed Fuels Regulatory Streamlining rule would make this problem far worse through an overinclusive definition of gasoline.6 Under the proposal, gasoline would now for the first time include “[a]ny fuel intended or used to power a vehicle or engine designed to operate on gasoline, except for gaseous fuel.”7

That definition would include not just mid-level blends but also E85. E85 is “used to power” flex-fuel vehicles, which are “designed to operate on gasoline.”

That makes no sense. If EPA wants to regulate E85 and mid-level blends sold for use in flex-fuel vehicles as gasoline, it should say so openly, and it should do so through regulations that are tailored to work for this market, not through regulations tailored for gasoline refiners. In the alternative, EPA should amend this proposed definition of gasoline to exclude fuels sold only for use in flex-fuel vehicles, and not just “gaseous fuel.”

Urban Air Initiative will file more detailed written comments. Thank you for your time.

1Letter from Margo Oge, Dir., Office of Transp. & Air Quality, EPA (Nov. 28, 2006).
2 79 Fed. Reg. 23,414, 23,558 (Apr. 28, 2014).
3 81 Fed. Reg. 80,828, 80,842 (Nov. 16, 2016).
4Id.

5 Administrative Petition, https://boydengrayassociates.com/wp-content/uploads/2019/08/Petition-20190809.pdf.
6 See 85 Fed. Reg. 29,034, 29,040–41, 29,101 (May 14, 2020).
7 Id. at 29,101. READ MORE