Energy

EPA Proposal Would Approve Use of E15 During the Summer

The prospects for year-round use of vehicle fuel with 15 percent ethanol (E15) are brighter with the EPA’s release of a proposed rule that would extend a Clean Air Act (CAA) waiver to E15 during the summer season.

The proposal fulfills President Donald Trump’s pledge in October 2018 to have the EPA initiate rulemaking to expand a CAA provision called the Reid Vapor Pressure (RVP) waiver for E15. Also at that time, the president directed the Agency to consider reforms to increase transparency and prevent price manipulation in the renewable identification number (RIN) market. RINs are credits that are generated upon production of qualifying renewable fuel; they are ultimately used by obligated parties to demonstrate compliance. Ethanol, which is produced primarily from corn, is considered a renewable fuel. The EPA’s proposal includes the four reforms noted in the president’s statement, as well as several additional proposed actions relating to RINs.

RVP Waiver

The 1-pound-per-square-inch (psi) RVP waiver (CAA Section 211(h)(1)) currently applies to E10 during the summer months. RVP is a measure of the volatility of gasoline. Gasoline must have volatility in the proper range to prevent problems with drivability, performance, and emissions. The waiver allows gasoline-ethanol blends to have a higher RVP than would be allowed under CAA Section 211(h)(1) (volatility requirements during the high ozone season) and the corresponding volatility regulations, which prohibit the RVP of gasoline from exceeding 9.0 psi during the summer. Currently, only blends of ethanol and gasoline containing at least 9 percent and no more than 10 percent ethanol by volume (i.e., E10) are granted the 1-psi waiver.

Under the proposal, the EPA would take the following steps to adjust the volatility requirements for E15 during the summer months (May 1 through September 15):

  • Modify the Agency’s interpretation of Section 211(h)(4).
  • Effect two changes—(1) remove the regulatory limitations put in place in keeping with the prior interpretation of CAA Section 211(h)(4) on the volatility of E15 promulgated in the E15 Misfueling Mitigation Rule (MMR); and (2) modify the associated product transfer document (PTD) requirements also promulgated in the MMR.
  • Clarify the Agency’s interpretation of CAA Section 211(f), making it clear that the conditions of Section 211(f)(4) waivers granted to E15 in 2010 and 2011 do not restrict the application of the 1-psi waiver to downstream oxygenate blenders in most circumstances.

“As a result of this action, parties would be able to make and distribute E15 made with the same conventional blendstock for oxygenate blending (CBOB) that is used to make E10 by oxygenate blenders during the summer,” says the EPA. (CBOB is the base gasoline made specifically for blending with 10 percent ethanol in conventional gasoline areas of the country). “E15 would then be held to the same gasoline volatility standards that currently apply to E10, maintaining substantially the same level of emissions performance as E10 since E15 made from the same CBOB during the summer would have slightly lower RVP than E10 and would be expected to have similar emissions performance.”

RIN Reforms

The proposal includes (with no changes) the four RIN reforms identified by Trump:

  • Require public disclosure when RIN holdings held by an individual actor exceed specified limits.
  • Require that the retirement of RINs for the purpose of compliance be made in real time.
  • Prohibit entities other than obligated parties from purchasing separated RINs.
  • Limit the length of time a nonobligated party can hold RINs.

In addition to the above provisions, the EPA is proposing that independent third-party auditors who verify RINs provide the Agency with a list of an obligated party’s affiliates and that parties follow certain conventions when reporting RIN prices to the EPA. The proposal also includes the Agency’s plan to update business rules in the EPA Moderated Transaction System (EMTS) to require that both parties in a RIN transaction enter the same RIN price. Finally, the proposal discusses the possibility of employing a third-party market monitor to conduct analysis of the RIN market, including screening for potential anticompetitive behavior.

The prepublication version of the proposal is here.