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E15 Schedule Tight Despite EPA Shutdown

Former Adviser Says Technical Aspects of Year-Round E15 Rule Not Easy to Complete

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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The partial government shutdown may affect the EPA timetable set for finalizing a year-round E15 rule. (DTN file photo by Chris Clayton)

OMAHA (DTN) -- It may be a fool's game to bet on how or if the partial federal government shutdown will matter when it comes to the already-tight timetable for EPA finalizing a year-round E15 rule prior to the summer driving season by June 1.

It has been about one week since the agency officially shut down, and a little more than a month ahead of an expected EPA release of a proposed rule in February.

When President Donald Trump announced in October the agency would move forward on E15, agriculture and ethanol interests were concerned about the tight timeline. If the proposed rule is released in February, this means the agency would be on track to finalize it just weeks ahead of the summer driving season.

This led to calls for the agency to expedite the rulemaking, which it has not done.

With or without a government shutdown, the EPA faces a tall task.

Paul Argyropoulos, a former senior policy adviser in the EPA's Office of Transportation and Air Quality and president of Policy Nexus Advisors in Damascus, Maryland, told DTN the timing of the shutdown may mean the agency isn't falling all that far behind on the rule.

An extended shutdown, however, could affect the ability of the agency to develop, propose and finalize a rule, he said, when it comes to finalizing by June 1.

"That being said, this shutdown occurred over the holidays, and many of the staff working these issues may have been on leave anyway," Argyropoulos said. "Further, the agency's funding did not expire until last Thursday so this is, in effect, the first full week of shutdown for EPA."

The conventional wisdom is EPA has been working on the technical aspects of an E15 rule for years and that finalizing a rule could happen on a compressed timeline.

Argyropoulos said making sure all the legal ducks are in a row doesn't come easy.

"This is not a new issue; however, getting the legal and technical language and positions aligned is not an easy task," he said. "The agency staff is very experienced and is used to working under very tight timeframes. Certainly, an extended shutdown has the possibility to impact this already very difficult schedule."

And the thought that EPA already has completed much of the work on E15 may not be true, Argyropoulos said.

"Many of the staff working on this package are the same that work on the RVO (Renewable Volume Obligations) package," he said. "Given that was only released at the end of November, that means they've only had a month to shift their efforts over to this rule. Hard to know exactly where things are in the process right now."

HOLDING OUT HOPE

Renewable Fuels Association President and CEO Geoff Cooper said that, despite the tight timeline, he believes the rule will be completed.

"From the outset, EPA gave itself very little wiggle room to complete the year-round E15 rulemaking before summer, so the shutdown is making a tight timeline even tighter," he said in a statement. "However, we remain confident that EPA can and will deliver on President Trump's commitment to resolve the barrier to year-round E15 sales before June 1."

Back in October, the agency released its unified fall 2018 agenda. Included was EPA's plan to release a proposed E15 rule by February 2019 with the idea of finalizing the rule by May 2019.

Included in that rule, according to the agenda, are proposed reforms to the market for renewable identification numbers, or RINs, in response to refiner concerns about the costs to comply with the Renewable Fuel Standard.

Trump announced during a rally in Council Bluffs, Iowa, that his administration was ready to "unleash the power of E15."

Back in October, ESAI Energy, http://esaienergy.com, forecast a marginal increase in E15 gasoline supply to 2020, despite the Trump administration's announcement to lift a federal ban on summer sales of high-ethanol blends.

ESAI estimated E15 demand is likely to grow by less than 60,000 barrels per day by 2020. With it likely replacing E10 volumes, only 5% of that small volume would replace motor gasoline blending components with ethanol, limiting its near-term impact on both petroleum-based gasoline and ethanol.

Federal law forbids the sale of E15 from June 1 to Sept. 15. E15 sales are restricted in nearly two-thirds of the country during the summer months because of ozone concerns. That has led to limited investments in storage, pumps and misfueling mitigation. The ability to sell E15 year-round is expected to make investments in necessary infrastructure and labeling more feasible.

Currently, E15 is offered by several major retailers, including Sheetz, Cenex, Kum and Go, Murphy USA, Kwik Trip, RaceTrac, Thornton's and QuickTrip. However, some retailers remain hesitant to invest in the infrastructure to distribute E15 since it cannot be sold year-round.

Green Plains Inc. CEO Todd Becker told DTN in an interview last fall that if EPA grants an E15 waiver, at least 10,000 more stations would offer the fuel.

With only about 1,400 of the more than 106,000 stations nationwide selling E15, ESAI said the demand is expected to remain limited in the short to medium term.

The average E15 price as reported by e85prices.com on Friday was $2.13. The price is lower than both unleaded gasoline, which averaged $2.50 a gallon nationally, and E10, which averaged $2.19 on Friday.

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

Follow him on Twitter @toddneeleyDTN

(CC/AG)

Todd Neeley

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