ARLINGTON, Va. — As industry groups weigh in on the U.S. Environmental Protection Agency’s (EPA) proposed rules on year-round E15 sales and Renewable Identification Number (RIN) market reforms, the Petroleum Marketers Association of America has staked a position firmly against a regulatory path to greater availability of E15, the 15% ethanol blend.
On March 12, the EPA released its long-awaited proposed rulemaking to enable year-round sales of E15. The ethanol blend is unavailable for sale to any vehicle other than a flex-fuel vehicle from June 1 to Sept. 15 in most markets because the EPA had not granted a waiver of summertime Reid vapor pressure (RVP) regulations. At the order of President Trump, the EPA had been racing to announce the proposed rule in time for the summer 2019 driving season. Its proposed rule would extend the summertime RVP waiver to E15 and define gasoline blended with up to 15% ethanol as “substantially similar” to the fuel used to certify Tier 3 motor vehicles.
The Petroleum Marketers Association of America (PMAA), Alexandria, Va., a federation of 47 state and regional trade associations that collectively represent about 8,000 independent petroleum marketers, has “concerns” with EPA’s plan to provide a year-round RVP waiver to E15, Rob Underwood, president of PMAA, told CSP Daily News.
“First, any change to expand the RVP waiver to E15 blends can only be made by Congress. EPA lacks the statutory authority to do so,” he said, referring to the argument that the Clean Air Act does not grant the EPA to provide the waiver to E15. This view is shared by the American Petroleum Institute (API), a trade association representing the U.S. oil and natural gas industry.
Underwood also points to concerns about the compatibility of underground storage tank (UST) components with ethanol blends higher than 10%—specifically, with pipe dope and seals in the piping system.
“Third, ethanol blends are proving to be a maintenance and life-expectancy nightmare for many components of the UST system, including ethanol-driven corrosion on the submerged pump, in-tank overfill protection and tank gauging probes,” he said. “Finally, we have expressed significant competitive and procedural concerns with E15 confusion aka ‘Unleaded 88’.” More than 90% of fuel retailers who sell E15 are doing so under the Unleaded 88 branding, according to ethanol industry group Growth Energy, although some retailers continue to sell it under variations such as Unleaded 15.
Other industry groups, including NACS and NATSO, have been largely supportive of regulatory efforts to ease retailers' ability to offer E15.
RIN Redo
The EPA has also proposed reforms to the market for RINs, the credits that obligated parties such as refiners under the Renewable Fuel Standard (RFS) use to demonstrate compliance with their biofuel blending quotas. Merchant refiners such as Valero Energy and CVR Refining have argued that RIN speculators have manipulated the market. The EPA has proposed a few changes, including limiting how long nonobligated parties under the RFS—fuel retailers—can hold RINs, and limiting purchase of RINs to obligated parties.
While NACS, NATSO and the Society of Independent Gasoline Marketers of America issued a joint press release strongly criticizing EPA’s RIN market reform proposals, PMAA is still reviewing them, said Underwood.
“At first glance, these reforms seem to be designed to stabilize the biofuel credit market by limiting RIN speculation,” he said. “Corn ethanol proponents are concerned that if RIN values are reduced, this will likely weaken the marketability for E15. Unfortunately, the majority of petroleum marketers lack the ability to blend ethanol at the rack and/or at retail which places them at a competitive disadvantage.”
Some smaller fuel retailers have complained that the current RIN system is stacked against them and gives a competitive advantage to large chains that are able to blend in large volumes of ethanol, earn RINs and sell them to refiners and importers. Many PMAA members are small fuel marketers.
“The bottom line is that Congress could avoid all of these reforms by just reducing the corn ethanol mandate to 9.7% of projected gasoline demand,” Underwood said. “Unfortunately, this is unlikely to happen given the political climate which forces EPA into this position to find other ways to reduce motor fuels chaos in the marketplace.”
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