Biden’s move to increase E15 sales comes too late, critics say

Gasoline with higher blends of ethanol could be sold year-round in eight Midwestern states including Iowa under a rule proposed Wednesday by the Environmental Protection Agency — but corn state officials say it comes too late.

The proposed rule, set to take effect in April 2024, is a victory for the biofuels industry, which for years has pushed to allow sales of gasoline blended with 15 percent ethanol during the summer, which hasn't been allowed because of concerns that it would worsen smog. The industry welcomed the EPA's proposal, which had been requested by governors in the eight states, but they questioned why the new rules couldn't begin now.

“While long overdue, I am thrilled that the EPA has approved our multistate bipartisan RVP waiver request that will pave the way for year-round E15 and bring certainty to the industry,” said a statement from Republican Iowa Gov. Kim Reynolds, who was among the governors asking for the ethanol waiver. “However, the arbitrary delay in implementation this summer is unacceptable and disappointing, but hardly surprising. Iowa won’t accept it without a fight. I look forward to requesting another emergency waiver for this year while at the same time asking the courts to require the Administration to grant our request immediately.”

Under the proposal, the higher blends could be sold during the summer in Iowa, Illinois, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin. Most gasoline sold in the nation is now blended with 10 percent ethanol and for sale year-round. The issue is especially important in those Midwest states because farmers there grow the bulk of the nation's corn, and about half that is used to produce ethanol.

However, refiners and pipeline operators argue they needed time to adapt, including by adding equipment to produce, store and distribute a new, lower-volatility gasoline blendstock for the region. To meet the EPA requirements, refineries would have to churn out raw, unblended gasoline that is less volatile — essentially creating a fuel specifically for the affected Midwest states. Refiners argued complying this year was infeasible, especially as summer gasoline production was underway.

“Fuel manufacturers and regional pipeline and terminal operators have made clear to the Biden administration and the eight petitioning states that the push to outlaw the current blend of summertime gasoline and replace it with a boutique blend is going to impose major costs on the Midwest’s fuel supply chain and consumers — ranging from $500-$800 million per year, and potentially higher if unforeseen interruptions occur,” a refinery trade group said in a statement.

An analysis commissioned by the American Fuel & Petrochemical Manufacturers predicted as much as 12 cents more per gallon in added industry costs to make and distribute the new fuel.

But biofuel boosters say that the shift would encourage more gas stations to eventually offer cheaper E15 year-round, still saving consumers’ money even after any price increase. Last year, E15 cost nearly $1 a gallon less than E10 in some areas

The American Coalition for Ethanol accused the EPA of delaying the action because of pressure from the petroleum industry.

“The administration appears to be caving to refiner crocodile tears by kicking the can to 2024 instead," the coalition said. "This delay means consumers in conventional gasoline areas of the country will be forced to pay more at the pump this year and retailers who want to offer lower cost E15 to their customers will be penalized.”

The EPA said it would hold a hearing on the proposed rule in late March or early April.

The Bloomberg news service contributed to this report.