E15 and waiver fight continues between ethanol and petroleum industries
YANKTON, S.D. -- The Environmental Protection Agency advanced the long-awaited proposed rule for E15, the same week it also granted five new small refinery waivers from the Renewable Fuels Standard dating back to 2017.
YANKTON, S.D. - The Environmental Protection Agency advanced the long-awaited proposed rule for E15, the same week it also granted five new small refinery waivers from the Renewable Fuels Standard dating back to 2017.
For years, the ethanol industry has worked both through Congress and administratively to get the Reid vapor pressure law lifted and allow year-round sales of E15. The EPA action comes nearly a year after a bitter fight broke out when the petroleum industry attempted to get President Donald Trump to dismantle the Renewable Fuels Standard.
While the ethanol industry welcomed the E15 proposal, there is cautious optimism the rule-making can be completed before the summer driving season starts. Brian Jennings, CEO of the American Coalition for Ethanol, says the rule was delayed in part by the government shutdown, so he's skeptical it can be completed in time. "It would be a land-speed record if they get this complicated rulemaking done in less than 90 days and that's about all we have to June 1," he says.
Another holdup is that EPA is including controversial reform of the use of Renewable Identification Numbers in the rule even though ethanol officials want it separated.
Lisa Richardson, South Dakota Corn Growers Association Executive Director says while reform is needed, they would rather have it separated from the E15 rule. "The deal that was cut (with the petroleum industry) was giving some more transparent RIN markets for those in the refining industry that have to purchase it," she says.
Despite that, Secretary of Agriculture Sonny Perdue says new EPA head Andrew Wheeler has assured him they'll make the deadline. "He had been in some confirmation hearings and had a confirmation vote. It's amazing how those things work, but he found a way to do that, so right now, it's on," he says.
Perdue added that Wheeler has stated if the rule isn't done, there is a plan B where EPA will not enforce the E15 rule. "I'm hoping he'll go ahead and say that on the record and send a signal to the people that they can proceed with E15 through the summer this year," Perdue says.
Other industry officials remain optimistic E15 will come in time to help the ethanol facilities that are struggling. Tim Lust, National Sorghum Growers Association CEO says, "Some of our plants have slowed down a little bit on production and backed off because of the low margins, so E15 would be critical for us."
The petroleum industry is expected to challenge the lifting of the Reid vapor pressure rule. "There is some concern out there in the industry that it'll be litigated from those that don't use ethanol and so making sure it's done right is as critically important as getting it done," Richardson says.
Meanwhile, the EPA continues to grant small refinery waivers from the Renewable Fuels Standard. On May 14, the agency announced approval of five more 2017 Small Refiner Exemptions to the Renewable Fuels Standard and noted that two more petitions have been received for 2018 exemptions. To date, 39 exemptions have been granted. Jennings says so far, EPA hasn't reallocated any of those gallons and if the agency doesn't, it may negate any gains from E15. "The net effect isn't a benefit for corn farmers in terms of grinding more corn to make ethanol or ethanol producers," he says.
Geoff Cooper, president and CEO of the Renewable Fuels Association, says the waivers are a slap in the face for the ethanol industry. "This is EPA kicking the industry when its already down. We're already dealing with the consequences of small refinery exemptions that were given out this time last year. We know what that's done to our market, it's destroyed demand throughout the year and we're seeing some of the lowest margins, worst conditions in the history of this industry," he says.
The new waivers, according to Cooper, wiped away another 366 million gallons of renewable fuels blending obligations, which is the equivalent to the output of four large ethanol plants.
The National Corn Growers Association has also been outraged by the waivers. The group's president, Minden, Iowa, farmer Kevin Ross says, "That on top of the 2.25 billion gallons that we already lost due to waivers, that's really, in my mind, an unacceptable situation."