EPA plans to issue higher-ethanol gasoline proposal by February: filing

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WASHINGTON (Reuters) – The Environmental Protection Agency aims to release its draft rule allowing year-round sales of higher ethanol gasoline blends by February, and end deliberations on the proposal by May, according to a filing with the Office of Management and Budget.

President Donald Trump last week announced his intention to lift the summertime ban on sales of so-called E15 gasoline, which was imposed by the EPA to reduce smog. The announcement marked a win for farmers eager to expand the market for corn-based ethanol, and was seen as a political victory for Trump ahead of congressional elections in November.

The EPA’s notice was published late on Tuesday.

Agriculture Secretary Sonny Perdue said last week he was confident the rule would be ready for the driving season next year, although industry experts said such a timeline was too ambitious.

Trump’s announcement capped a months-long effort by the White House to thread the needle between rival corn and oil industry interests, both of which are unhappy with the administration’s handling of the nation’s biofuels policy.

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The oil industry wants the Renewable Fuel Standard, which requires refiners to add ethanol to their fuels, to be overhauled to reduce the burden on refiners, while the powerful corn lobby wants the policy to more aggressively promote the use of biofuels. The oil industry has threatened to take legal action over the administration’s E15 move.

Industry participants say the EPA does not have the authority to change the rule on its own and that Trump needs an act of Congress, which could take years. [nL2N1WR1B3]

The proposed rule will be coupled with restrictions on the multi-billion biofuel credit trading industry that is aimed at reducing speculation that has contributed to high prices for the credits in recent years. Refiners that are unable to blend biofuels into their fuels are required under the RFS to buy credits from rivals that do.

Reporting by Humeyra Pamuk; Editing by Paul Simao