EPA Delays Final Decision on E15 Waiver

EPA is working to implement its long-term renewable fuels mandate of 36 million gallons by 2022. With the exception of a limited number of retail locations which market fuel containing up to 85% ethanol for use in flex fuel vehicles, the vast majority of fuels have been limited to a 10% blend of ethanol pursuant to waiver which became effective in 1978. The use of E10 is expected to peak in 2011 or 2012 hitting what is known as "the blend wall". At that point, the use of renewable fuels will be well short of EPA's goal. Against that backdrop, on March 6, 2009, Growth Energy and 54 ethanol manufacturers petitioned EPA under Section 211(f) of the Clean Air Act to allow the blending of up to 15% ethanol in gasoline (E15). EPA solicited comments from all stakeholders concerning this petition.  

 

In correspondence dated November 30, 2009, Gina McCarthy, Assistant EPA Administrator advised Growth Energy that EPA did not have sufficient information to grant the waiver petition. EPA indicated that although the studies had not been completed, EPA's assessment to date indicated that the fuel, engine and emission control systems on newer vehicles would likely be compatible with higher blends of ethanol such as E15. However, EPA indicated that it continues to evaluate the question of component durability when higher blends are used over many thousands of miles. EPA referenced an on-going study conducted by the Department of Energy which will provide data on this issue. According to EPA, DOE's program involves complete testing of 19 vehicles to examine the long-term emissions impact of higher ethanol blends on newer vehicles and is expected to be completed by August, 2010. To date, DOE's tests have been completed for only two vehicles, but an additional 12 vehicles are expected to be tested by the end of May. Should these tests results be positive, EPA indicates that it could be in a position to approve E15 for 2001 and newer vehicles by mid 2010.  

 

Anticipating that E15 would be sold in addition to E10, EPA indicated that it was taking steps to address fuel pump labeling issues to make sure consumers utilized the proper gasoline for their vehicles and equipment (such as lawn mowers, boats, etc.) should higher ethanol blends be approved.  

 

In addition to the future Department of Energy vehicle tests, there are several other factors which may delay or limit the blending of E15. First, refiners may have to make a different blend stock to accommodate E15. Second, it is not clear that the retail end of the industry is prepared to handle E15. According to OPIS (Oil Price Information Service), there are 700,000 gasoline dispensers at 160,000 gasoline outlets across the United States and none are certified for fuel above E10. Although many outlets sell E85, OPIS indicates that these locations may violate OSHA requirements that dispensers be certified by Underwriters Laboratory (UL). There is also some concern regarding the impact of higher levels of ethanol on underground storage tanks over time. Finally, since it appears the E15 may not be suitable for pre-2001 cars and smaller engines, it may be difficult for retailers to service the entire market without the capacity to blend ethanol at the pump. This may require costly changes in retail equipment and infrastructure.

This article was authored by James R. Snyder, Jackson Kelly PLLC. For more information on the author see here.