Biofuel groups express support for E15, argue against RIN reform

By Erin Voegele | March 29, 2019

On March 29, the U.S. EPA held a public hearing in Ypsilanti, Michigan, on its proposed rule to allow year-round sales of E15 and enact renewable identification number (RIN) market reforms. Members of the biofuel industry were among those to offer testimony at the event.

The EPA first released its proposed E15/RIN market reform rule on March 12. The rulemaking includes regulatory changes to allow gasoline blended with up to 15 percent ethanol to take advantage of the 1-pound-per-square-inch Reid vapor pressure (RVP) waiver that currently applies to E10 during the summer months. The proposed rule also seeks to implement regulatory changes to modify certain elements of the Renewable Fuel Standard’s RIN compliance system in an effort to bring greater transparency to the market and deter price manipulation.

In his testimony at the hearing, Geoff Cooper, president and CEO of the Renewable Fuels Association, expressed strong support for the E15 aspects of the rulemaking. “Extending the 1-psi RVP waiver to E15 during the summer volatility control season will open the marketplace to a fuel that provides consumers higher octane, lower cost, and reduced tailpipe emissions,” he said. “We firmly endorse EPA’s proposal to interpret section 211(h)(4) of the Clean Air Act as being applicable to ethanol blends containing at least 10 percent ethanol, including E15, and we believe EPA’s justification for this interpretation is well supported by the statutory text and Congressional intent.”

Cooper also encouraged the EPA to consider a more flexible approach to the regulation of E15 made at blender pumps. “A majority of the retail dispensers selling E15 today are, in fact, blender pumps that mix E85 and E10 together to make the finished fuel. Under your proposal, E15 made in this manner would not qualify for the 1-psi RVP waiver, even if the finished fuel met applicable sulfur and benzene standards and had volatility of 10.0 psi or less,” he said. “This seems unreasonable, especially because E15 made from E85 and E10 via a blender pump typically contains just 1 percent natural gasoline.”

Regarding the rulemakings RIN components, Cooper said “RFA generally opposes any changes that would reduce RFS compliance flexibility, diminish liquidity in the RIN market, give certain parties in the marketplace unfairly advantaged positions, add unnecessary complexity, increase administrative burdens, or impugn the RIN market’s ability to incentivize expansion of renewable fuel consumption. RFA does not believe any of the four main options proposed represent an improvement or enhancement of the current RIN program.”

In addition, he discussed the issue of small refinery exemptions, noting while RFS small refinery exemptions are not the explicit subject of this rulemaking or today’s hearing, we feel compelled to remind EPA that continued abuse of the SRE program would significantly undermine the ethanol market expansion intended to result from finally allowing year-round sales of E15.”

Cooper also urged the EPA to “sever the RVP and RIN reform provisions into two rulemaking efforts in the event it appears from the comments submitted that the RIN reform provisions might jeopardize or complicate promulgation of the RVP measures before May 31.”

Ron Lamberty, senior vice president and market development director of the American Coalition for Ethanol, also expressed support for the E15 provisions of the rulemaking in his testimony, urging the EPA to finalize a legally defensible rule by June 1. He, however, said the EPA should cast away the proposed RIN market changes, which could undermine ethanol demand and negate the upside benefit of year-round E15.

“ACE supports EPA’s effort to enact a legally-defensible rule providing RVP relief to ethanol blends 10 percent and higher, and to do so in time for E15 retailers to avoid the pointless stop-and-start dance they have been forced to perform for the previous seven summer driving seasons,” Lamberty said. “The unnecessary changes in product availability and labeling currently required each June and September—changes which prevent stations from offering a more environmentally friendly, higher octane, lower cost fuel, during the busiest time of the year—have been a major roadblock preventing gas station and convenience store owners and operators from offering E15. The fact thousands of other retailers are willing to jump through EPA’s hoops each spring and fall is testament to how valuable E15 is to those businesses and their customers.”

Regarding the proposal’s RIN reforms, Lamberty cautioned “the proposed changes to blending and RIN trading proposed in this rule would create new challenges for retailers and blenders, removing incentives for those who have invested in blending infrastructure and turning control of the RFS back to those who have refused to take action to comply with the rule over almost a decade and a half since the RFS became law.”

Emily Skor, CEO of Growth Energy, emphasized the economic, engine performance and environmental benefits of E15 and discussed how year-round E15 sales will benefit rural America. “Eliminating this barrier promises to unlock an estimated 1.3 billion gallons of new annual ethanol demand,” she said. “Over time, that added demand could grow to seven billion gallons, lending an economic lifeline to rural families.... Across the heartland, more than 200 biofuels plants support their communities, and these plants are under incredible strain. Many have already shut their doors or idled production in recent months. The recent flooding across the Midwest has only exacerbated these tough times, not to mention the 2.6 billion gallons lost to small refinery exemptions.

“With year-round E15, EPA has the opportunity to give American farmers and producers the ability to grow greater demand and expand market access for their homegrown fuel,” Skor continued.

Kurt Kovarik, vice president of federal affairs at the National Biodiesel Board, urged the EPA not to adopt the proposed changes to the RIN system as it finalizes the E15 rule. “EPA must change its practice of encouraging retroactive small refinery exemption petitions,” he said. “We ask that the agency use this opportunity to instead address the timing of small refinery exemption petitions. If EPA finds that it can easily propose a quarterly compliance deadline in the RIN reform proposed rule, the agency should feel just as comfortable applying a similar reasonable administrative requirement that small refineries submit petitions before the end of the compliance year.”

A public comment period on the proposed rule is open through April 29. To date, more than 1,000 written comments have been filed on the rulemaking. Comments can be filed online at www.Regulations.gov under Docket ID No. EPA-HQ-OAR-2018-0775