On March 12, 2019, the Environmental Protection Agency (EPA) proposed a new rule that would allow gasoline blended with up to 15% ethanol, or E15, to be sold all year. A pre-publication version of the final version of this Rule was issued by the EPA on May, 30, 2019, in time for the summer driving season. The final rule was published in the Federal Register on June 10, and the American Fuel & Petrochemicals Manufacturers Association immediately filed suit in the U.S. Court of Appeals for the D.C. Circuit challenging the rule.
Farming states have long sought this rule change, as it would dramatically expand the market for corn, the raw material in ethanol. Currently, gasoline with 10% ethanol, or E10, may be sold year-round, but not E15. The proposed rule was rushed out with only a cursory cost-benefit analysis, in the hopes that it can be finalized before the summer 2019 driving season.
As modified by the 1990 Clean Air Act (CAA) Amendments, the CAA’s mobile source provisions prevent the sale of fuel blends with a reid vapor pressure (RVP) greater than 9.0 psi during the summer in areas with ground-level ozone problems. High RVP, a measure of the volatility level of a gasoline, leads to higher evaporation levels and in turn ground level ozone pollution. In hot weather, gasoline tends to evaporate more, exacerbating the problem.
The CAA does make an exception to this rule for E10, allowing it to have an RVP of 10 psi. Specifically, the CAA provides that, “For fuel blends containing gasoline and 10 percent denatured anhydrous ethanol, the [RVP] limitation under this subsection shall be one pound per square inch (psi) greater.” The EPA has always interpreted this waiver as applying to E10 only, and not E15.
The proposed rule would change this interpretation, aggressively reading the language to apply not only to fuel blends containing gasoline and “10 percent … ethanol,” but also to fuel blends containing at least 10% ethanol. This would allow the exception to apply to E15.
In the rulemaking, the EPA explains that “[t]he term ‘containing’ as used in … the phrase ‘fuel blends containing gasoline and 10 percent denatured anhydrous ethanol’ is ambiguous. We interpret this language as establishing a lower limit, or floor, on the minimum ethanol content for a 1-psi waiver … rather than an upper limit on the ethanol content.”
The proposed rule also modifies the Renewable Fuel Standard (RFS) compliance system, under which ethanol content in fuel is verified, in order to improve the functioning of and prevent manipulation of the renewable identification number (RIN) market.
The effect on ground-level ozone of expanding the waiver should be limited, as this new interpretation still provides a 10 RVP limit for any ethanol-blended gasoline on the market. Environmental criticisms of the new rule center on the marginal decrease in fuel efficiency associated with E15 over E10, the amount of energy required to produce ethanol, and concerns over increases in farmland devoted to corn, a mono-crop that has adverse impacts on wildlife and requires massive amounts of harmful fertilizer. (Already, about 40% of the United States corn crop is used for ethanol.) Oil companies, who stand to lose market share with the introduction of the new rule, have criticized it as a “bad deal” for American consumers, while farm groups have applauded the move.