President Donald Trump rolled out the administration’s plans to allow summer E15 sales on Tuesday. But now, the Environmental Protection Agency has to implement the regulation, which could prove to be a vexing legal dilemma.
The announcement was in Trump’s signature style: big on bombast, light on specifics. It followed comments from a senior White House official on Monday detailing plans to call on EPA Acting Administrator Andrew Wheeler to begin two phases of rule making: one change to issue the Reid Vapor Pressure waiver necessary for summer E15 sales, another to bring more transparency to the Renewable Identification Number trading market.
Speaking Tuesday night in Iowa, Trump attributed his desire to act on the E15 waiver to a campaign pledge he made in the state during his run for the presidency.
“I made that promise to you during the campaign … promises made, promises kept,” he said surrounded by a venue full of supporters, many of whom were wearing green “Make Our Farmers Great Again” hats. “We are unleashing the power of E15 to fuel our country all year long. Not eight months, all year long.”
At this time, there is no firm timeline on when the EPA might begin rulemaking. A spokesperson said the agency "will follow the president's direction and proceed as expeditiously as practicable." According to a White House pool report, President Trump told reporters on Air Force One en route to Iowa that "it's all going to go very quickly."
Biofuel champions on Capitol Hill were quick to praise Trump's move. Iowa Republican Sen. Chuck Grassley cited biofuel industry estimates that led him to declare E15 “a savior for both farmers and the ethanol industry into the future.”
“Today’s announcement will be welcome news to farmers throughout the Midwest and Great Plains,” Sen. John Thune, R-S.D., said in a statement. “Since year-round E15 sales would naturally help lower fuel prices, this also means consumers across the country will have more affordable choices at the pump, in addition to reinforcing American energy dominance.”
The effort to address RINs – the credits used to measure compliance with the Renewable Fuel Standard – is seen as an olive branch to refiners in exchange for the E15 waiver. But that won’t stop the likely legal challenge the waiver will face.
“The President has promised to broker a deal to reform the RFS that works for all stakeholders. This isn’t it,” Chet Thompson, president and CEO of the American Fuel and Petrochemical Manufacturers, said in a statement. He urged Wheeler to “abandon this ill-conceived idea.”
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Mike Sommers, CEO of the American Petroleum Institute, offered additional legal foreshadowing.
“EPA has previously stated that it does not have the legal authority to grant the E15 waiver, and we agree with that assessment,” Sommers said. “The industry plans to aggressively pursue all available legal remedies against this waiver.”
The looming legal uncertainty could be addressed through EPA’s rule making process, biofuel groups hope. They are now calling on EPA to “publish a legally-defensible approach” – as American Coalition for Ethanol CEO Brian Jennings put it. How the EPA could best go about avoiding legal troubles remains to be seen.
“Hopefully, they will come forward with the best possible rule that’s the most defensible,” a biofuel industry source said. Emily Skor, CEO of Growth Energy, said the organization has offered advice to EPA as to how to approach the legality issue, but is trying not to be too prescriptive.
“They know that there’s going to be scrutiny. There’s scrutiny on all the rules coming out,” she said, also noting that EPA could take comment on multiple different pathways to the RVP waiver or just one. “Once we see a rule we’ll be able to comment more substantively.”
Opposition also poured in from the small engine community concerned about more widespread E15 sales leading to engine issues in their products. For instance, the EPA does not allow E15 use in boats, and Nicole Vasilaros with the National Marine Manufacturers Association said in an interview with Agri-Pulse that more needs to be done than just the RVP waiver.
“If we’re going to be moving in a direction of higher and higher ethanol, then a lot has to change, not just allowing more ethanol out there,” she said. “The way the EPA certifies their engines also has to change.”
Vasilaros said consumer education will also be necessary, especially if more E15 is going to hit the markets during prime boating months.
“The average consumer is going up to the retail gas station, they’re looking at price and they’re not paying a lot of attention,” she said. “The labeling that’s there is very minimal and it’s probably not going to grab that consumer's attention.”
There’s also the legitimate question as to whether or not the E15 announcement will be the “savior” as it’s been sold by pro-ethanol groups and lawmakers. Most of the gasoline sold in the United States is an E10 blend. While it’s difficult to predict how many stations and consumers will switch to E15 should it become more widely available as a result of this announcement, University of Illinois economist Scott Irwin said, in the short term, the E15 waiver is “much ado about nothing.”
“Put it this way: That announcement will not change my corn (supply and demand) balance sheet by one decimal point,” he said.
So why go through the process of ordering a legally vulnerable policy change with a debatable impact? The answer might boil down to executive prerogative.
“The president has long thought that this was a good idea,” a senior White House official told reporters on Monday. “If there are challenges, we’re confident with our position, but we understand that’s a possibility.”
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