Ethanol industry vows to fight court’s reversal of E15 rule

By Erin Voegele | July 02, 2021

The D.C. Circuit Court of Appeals on July 2 reversed a rule issued by the U.S. EPA in 2019 allowing year-round E15 sales. Representatives of the U.S. ethanol industry have vowed to pursue all available options to ensure continuity of E15 sales and find a solution before the 2022 summer driving season.

The EPA in June 2019 published a final rule extending the 1-pound-per-square-inch (psi) Reid vapor pressure (RVP) waiver to E15. The rule found that E15 is substantially similar to E10 certification fuel and allowed for year-round sales of the fuel blend. Prior to the rule, E15 could not be used to fuel non-flex fuel vehicles in summer months.

Within days of the EPA’s rule, on June 10, 2019, American Fuel and Petrochemical Manufacturers filed a petition for review with the D.C. Circuit Court of Appeals. A statement released by AFMP in May 2019 argues that the statutory language in the Clean Air Act “leaves no question that the EPA lacks authority to extend the E10 volatility waiver to E15.” Growth Energy, National Corn Growers Association, and the Renewable Fuels Association intervened in the case in support of the EPA.

Oral arguments pertaining to the challenge were held in April 2021 before a panel of three judges.

The court on July 2 issued it opinion, holding that Section II of EPA’s rule exceeds the agency’s authority under Section 7545 of the U.S code, which addresses the regulation of fuels. As a result, the court has vacated that portion of the rule. Section II addresses the application of the 1-psi waiver to E15.

Interveners Growth Energy, RFA and NCGA issued a statement expressing disappointment with the court’s ruling. “We disagree with the court’s decision to reject EPA’s move to expand the RVP waiver to include E15, a decision that could deprive American drivers of lower carbon options at the pump and would result in more carbon in the atmosphere,” they said.

“We are working to ensure the continuity of E15 sales through the 2021 summer season and beyond. This decision could impact summertime sales across all non-RFG areas where nearly two-thirds of retail sites offering E15 currently do business,” the interveners continued. “If E15 in those markets were to end, summertime E15 sales would fall by 90 percent.

“We are pursuing all available options and will work with the administration and our congressional champions to ensure that we have a solution in place before the 2022 driving season.”

Geoff Cooper, president and CEO of the RFA, called the decision a heavy blow to the ethanol industry, retailers and consumers. “If, as a result of this decision, EPA were to return to the summertime ban on E15, it would reverse the tremendous progress we’ve made on reducing GHG emissions from transportation, growing markets for America’s farmers, and lowering fuel costs for consumers,” he said. “In the wake of today’s decision, RFA and its partners are exploring all of our options to protect and expand the market for lower-cost, lower-carbon E15.”

“It is sadly ironic that the refiners crying about high RIN credit prices and tight RIN stocks are the same refiners that are trying to halt E15 expansion and artificially constrain the supply of RINs,” Cooper added. “This is just another case of refiners cutting off their nose to spite their face. But in the end, we are confident that global outcry and demand for low carbon fuels will win out over the refiners’ deep pockets and their incessant campaign to protect dirty petroleum’s market share.”

The American Coalition for Ethanol also expressed disappointment in the court’s finding. “ACE is disappointed the D.C. Circuit Court chose not to see the oil industry’s opposition to EPA’s rule for what it is: an effort to maintain big oil's half-century old 90 percent gasoline mandate,” said Ron Lamberty, senior vice president of ACE. “That fact was clearly stated in the decision as the Court pointed out API and oil companies filed suit because ‘when agencies lift regulatory restrictions on their competitors or otherwise allow increased competition.’ Making higher octane, lower cost E15 available reduces carbon emissions and lowers costs, and oil companies have no interest in competing with that. Big oil has gone to courts, regulators, and elected officials constantly since ethanol was introduced, to make sure they continue to control all our energy choices, box out all potential competition, and maximize the dollars American drivers have to give oil companies for fuel. It's an incredibly unfortunate irony this decision was handed down right before Americans celebrate freedom by taking to the highways in the busiest driving holiday of the year, with the highest prices drivers have seen in years.

“We continue to believe EPA’s interpretation of the Clean Air Act holding E15 to the same gasoline volatility standards as E10 is consistent with Congressional intent while reflecting the improvements in future motor fuels Congress anticipated,” Lamberty continued. “EPA’s ruling in 2019 cut the RVP red tape allowing more retailers to add the blend to their fuel slate and offer their customers a low carbon fuel with higher octane at a lower cost, and we’ll continue to work with our industry partners, as well as administrative and legislative officials, to make sure this ruling doesn’t set back the important growth of lower carbon options at the pump to help the Biden Administration decarbonize the transportation sector.”

The Iowa Renewable Fuels Association also expressed frustration with the court’s action. “We are very disappointed by today’s decision to strike down EPA’s rule that makes it easier to sell E15 year-round in all markets,” said Monte Shaw, executive director of the IRFA. “It is still our view that the law allowing an RVP waiver for blends containing 10 percent ethanol can and should be applied to E15, which does contain 10 percent ethanol, and a little more. There is no scientific or environmentally-sound reason to erect arbitrary barriers to the sale of E15 in the summer months, which has lower combined evaporative and tailpipe emission than either E0 or E10. Today’s decision really turned this section of the Clean Air Act on its head.

“Every legal, regulatory and legislative option will be pursued to reverse this decision,” he continued. “We are confident that as this issue continues to work its way through the legal and regulatory process, E15 sales during this summer’s driving season will not be impacted. The key will be to find a solution by June of 2022 to ensure the rug is not pulled out from under fuel retailers across the country who have added E15 to their stations, banking on the certainty EPA provided to offer the fuel all year. Ethanol producers will not abandon these retailers as we continue to find a path for E15 to be sold all year long.

“It is painfully ironic that last week we lost an important RFS lawsuit when the Supreme Court found that agencies could broadly construe the word ‘extension,’ while today the DC Circuit Court rules against us because an agency did not employ the most narrow and limiting definition of the word ‘contains,’” Shaw added. “Perhaps last week’s Supreme Court loss sowed the seeds of this decisions future reversal.”

Sens. Joni Ernst, R-Iowa and Chuck Grassley, R-Iowa, tweeted their support for the ethanol industry and vowed to keep fighting for year-round E15.