Five Ways to Save Year-Round E15 Sales

LINCOLN, Neb. (DTN) -- The nixing of EPA's E15 rule that allowed year-round sales has in many respects taken the ethanol industry back to square one.

The U.S. Court of Appeals for the District of Columbia Circuit last week tossed out the Trump administration's rule that had been widely celebrated by the ethanol industry. Eliminating the restriction on E15 use in some areas of the country, from June 1 to Sept. 15, set in motion expanded offerings of the fuel by gasoline retailers across the country.

There are multiple actions in response to the court ruling that could be taken in the coming weeks and months. Ethanol groups told DTN they are considering the options.

In response to DTN's request for comment, EPA said it "is reviewing the decision."

Absent action taken by the EPA or others, by the spring of 2022 the ethanol industry would be heading into next driving season without the ability to sell E15 nationally.

Growth in retail gasoline infrastructure during the past few years has increased E15 availability to nearly 2,500 retail locations in 30 states and 230 terminals.

So, what's next for E15?

REID VAPOR PRESSURE

The court case, potential rule changes or legislative fixes revolve around Reid vapor pressure, or RVP, which is a generic term for measuring the volatility of gasoline. Effectively, the lower the RVP, the less volatile the gasoline, and less potential for ground-level smog.

The Clean Air Act previously prohibited the sale of gasoline with an RVP in excess of 9.0 pounds per square inch (psi) during the high-ozone summer season of June 1 to Sept. 15.

Congress amended the Clean Air Act in 1990 to provide a 1-psi RVP waiver for fuel blends "containing gasoline and 10% ethanol." At the time, E10 was the highest ethanol blend stock sold.

After years of lobbying by the biofuels industry, EPA issued a rule in 2019 declaring E15 as "substantially similar" to E10 and extended the RVP waiver to gasoline "containing at least 10%" ethanol to E15.

The petroleum industry challenged that waiver for E15.

EN BANC HEARING

It was a three-judge panel of the DC Circuit Court that issued a ruling last Friday. (https://www.dtnpf.com/…)

The court said in its 19-page opinion on a case brought by petroleum refiners that the RVP waiver rule that opened the door to E10 sales originally, does not apply to E15 even though the Trump administration declared the two blends to be substantially similar fuels.

The EPA and the ethanol and agriculture groups (Growth Energy, RFA and the National Corn Growers Association) that intervened in the case could ask the nation's second-highest court for an en banc hearing -- a hearing before all 11 judges of the D.C. Circuit. The deadline to request a rehearing is Aug. 16.

Odds are against such a hearing being granted by the D.C. court.

According to the Yale Journal on Regulation, the D.C. Circuit Court granted just eight en banc hearings from 2010 to 2017. All of the appeals courts combined grant between 80 and 90 en banc hearings each year.

According to the court's internal procedures: "Like petitions for rehearing by a panel, petitions for rehearing en banc are frequently filed but rarely granted. Federal rule of appellate procedure 35(a) expressly states that en banc hearings are not favored and ordinarily will not be ordered except to secure or maintain uniformity of decisions among the panels of the court, or to decide questions of exceptional importance."

Geoff Cooper, CEO and president of the Renewable Fuels Association, said it was important to note the court issued an order withholding the issuance of a mandate to restrict E15 sales until seven days after any petition for rehearing.

"In other words, the current E15 RVP rule remains in place and in effect at least until the D.C. Circuit issues its mandate, which won't happen until at least seven days following a decision on any rehearing requests," Cooper said.

"So, even if the court received a rehearing request on Aug. 16 and decided the petition that same day, it wouldn't issue its mandate until Aug. 23 at the earliest."

That means the current summer driving season likely will be unaffected by the ruling. The process would expect go beyond the current driving season.

There is hope in the industry and/or the EPA will appeal the D.C. Circuit decision and that the agency would continue to allow E15 sales in areas of the country that would otherwise have restrictions.

SUPREME COURT APPEAL

If the D.C. Circuit denies a petition for an en banc hearing, EPA or other parties to the litigation could appeal to the Supreme Court to hear the case.

The deadline for filing a request for hearing, or writ of certiorari, is Sept. 30.

Again, odds are long the Supreme Court would agree to hear the case, as it grants hearings to just 80 cases each year.

EPA ACTION

Cooper said the EPA could establish what is called RVP parity for E15, by proposing regulations to remove the E10 waiver.

Such an action could compel refiners to produce a uniform lower volatility. That would allow for blending both E10 and E15 without the need for any RVP waiver.

"EPA had begun to explore this option in the past, and it is an approach that had the support of RFA, automakers and some environmental NGOs (non-governmental organizations)," Cooper said.

In addition, EPA could require a lower RVP gasoline blend stock that when blended with ethanol would allow E15 to be below the 9.0 psi RVP requirement.

The major downside is any action taken by EPA would be time consuming. Any reinterpretation of the Clean Air Act to allow E15 would require the agency to develop a proposed rule, seek public comment and then finalize the rule.

LEGISLATIVE OPTIONS

Congress could introduce and enact legislation to clarify the Clean Air Act to allow blends above 10% to be sold year-round in conventional gasoline areas where E15 use could be restricted.

Enacting E15 legislation likely would need to be done as part of a larger climate change proposal related to infrastructure and/or decarbonizing transportation fuels.

STATE ACTIONS ON E15

State governments may be able to take action to protect E15 markets.

Cooper said states could "voluntarily decline" to recognize the 1 psi RVP waiver for E10 in conventional gasoline markets. Several states already decline to recognize the RVP waiver.

Gasoline suppliers to states that don't recognize the RVP waiver are required to ensure ethanol-blended gasoline meets RVP limitations without the benefit of the RVP waiver.

"Again, this would put E10 and E15 on equal footing and compel refiners and blenders to make lower-volatility gasoline blendstock -- suitable for both E10 and E15 blending -- more broadly available," Cooper said.

E15 BACKGROUND

On May 30, 2019, EPA issued its final rule providing Reid vapor pressure relief for E15 just before the June 1 kick-off of the 2019 summer driving season. Oil refiners filed a lawsuit challenging the rule in the D.C. Circuit Court.

In August 2020, biofuel and agriculture groups filed a brief as intervenors in the lawsuit.

In April 2021, oral arguments were held in the D.C. Court and on July 2, 2021, the court reversed EPA's 2019 regulation.

Read more DTN coverage here:

Ag, Biofuel Groups Defend E15 in Court: https://www.dtnpf.com/…

Attorney: E15 Rule on Solid Ground: https://www.dtnpf.com/…

Petroleum Push Poll Takes Aim at E15: https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @DTNeeley

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