The Environmental Protection Agency has rolled out its long-awaited response to a petition that would expand sales of higher ethanol blends, but its proposal includes a delay that has already angered the biofuels industry.
Under the proposal, sales of gasoline with a 15% ethanol blend would be allowed in the summer of 2024 across eight states: Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin. The governors in those states had petitioned the EPA for a waiver that would remove a current prohibition from selling E15 during the summer due to fuel volatility regulations.
While the proposal may represent some progress and give the industry annual certainty in those states, it leaves the upcoming summer with no solution just weeks before companies will need to make long-term plans for the fuel that will come out of gas pumps in June.
In September, EPA Administrator Michael Regan told reporters at a Growth Energy event in Washington that he expected the rulemaking to be “done in time for the 2023 ozone season.” But in Wednesday’s proposal, the agency says that timeline can’t be met.
“We recognize that the initial requests made by the governors of many of the states were submitted in the spring of 2022, such that a summer of 2023 effective date may have been possible, and seek comment on such an effective date,” EPA said in its proposal. “However, we have also received numerous petitions to delay the effective date of this action to at least 2024.”
EPA says an “insufficient supply” of fuel will prevent the agency from allowing the change to be effective for this summer, since the industry is “entering into the time frame when refineries already have to begin producing fuel for use in the summer months. As such, refineries would not have sufficient and appropriate notice to begin modifying their fuel supply for the 2023 summer season.”
Growth Energy CEO Emily Skor said in a statement the group was “pleased to see EPA make progress … but we’re disappointed that the EPA proposal doesn’t provide a fix for 2023.”
“American drivers have been able to purchase E15 every summer since 2019, and this summer should be no different,” she said. “EPA can ensure that access continues in 2023, and should take whatever steps are necessary to do so, including through the use of an emergency waiver.”
EPA used emergency waiver authority to allow the sales to take place last year. The Trump administration used regulatory action to allow summer sales before that, but those changes were struck down in the courts.
Compounding the frustration among biofuels leaders is the delay in EPA’s response to the governors’ petition, submitted nearly a year ago. By law, a response was required within 90 days, but the agency and the White House Office of Management and Budget — which completed its interagency review of the proposal last week — took roughly 10 months to respond.
“These governors did the right thing, but EPA’s proposal delays this solution,” National Corn Growers Association President Tom Haag said in a statement.
Renewable Fuels Association CEO Geoff Cooper, speaking at the group’s annual gathering in Orlando Wednesday, characterized that delay as “kicking the can on implementation of the governors’ petition” until summer 2024.
“Why would the White House drag its feet on this?” he asked the audience. “It all boils down to oil industry scare tactics. We've had a handful of pipeline companies and refiners that spooked the administration into thinking that the governors' petition would somehow cause a significant increase in gas prices.
“And of course, that's complete nonsense,” he said. “Everybody knows that allowing year-round E15 would result in lower prices.”
Ben Hengst, deputy director of EPA’s Office of Transportation and Air Quality, told RFA members the agency will ask for public comment on the proposal, including at an upcoming public hearing; the EPA website says that event will be virtual and take place “in late March or early April 2023.”
“Given where we are in the calendar, it was EPA's judgment that we simply cannot do that at this point,” Hengst said about making the rule effective for the upcoming summer. Pressed by a member of the audience on the subject, Hengst said “I don't think I am in a position to say all of the reasons why it took as long as it did.”
Last year, lawmakers introduced a bill to allow nationwide year-round sales of E15 that carried the support of the American Petroleum Institute and many biofuels organizations. API, which represents the nation’s largest oil companies, said it was concerned about the prospect of a “boutique fuel market in the Midwest” if the governors’ petition is approved. Instead, the organization would prefer a national solution.
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Brian Jennings, CEO of the American Coalition for Ethanol, said the proposed delay “makes a more permanent, nationwide E15 solution even more critical.”
“EPA made multiple public promises these Midwest states would be approved for E15 market access in time for the 2023 summer driving season. Now, the Administration appears to be caving to refiner crocodile tears by kicking the can to 2024 instead,” he said. “This delay means consumers in conventional gasoline areas of the country will be forced to pay more at the pump this year and retailers who want to offer lower cost E15 to their customers will be penalized.”
Senators may also use other forms of influence to demonstrate their frustration with the EPA over the matter. On Tuesday, Iowa Republican Chuck Grassley, a longtime biofuels stalwart on Capitol Hill, floated the idea of placing a hold on pending EPA nominees. At the time Grassley made his remarks, EPA’s proposal was not yet released, and the senator was speaking to his consternation about the delay, not about the contents of the policy.
Joe Goffman’s nomination to lead EPA’s Office of Air and Radiation — which has jurisdiction over biofuels policy — is currently pending before the Senate Environment and Public Works Committee, which is holding his confirmation hearing Wednesday. He was nominated for the position last year, but was not confirmed by the full Senate and not reported favorably by the committee; all 10 of the panel’s Republicans voted against his nomination, resulting in a 10-10 tie.
Story updated to include additional comments.
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