EPA could waive E15 enforcement: USDA

The US Department of Agriculture has encouraged environmental regulators to waive enforcement of laws blocking the summer sale of ethanol blends above 10pc if a rule is not in place by 1 June, the department's deputy secretary said today.

The Environmental Protection Agency (EPA) should tell retailers that it will not enforce violations of the Clean Air Act if rules are not completed to allow the sale of 15pc ethanol blends of gasoline after 1 June, US Department of Agriculture deputy secretary Stephen Censky said at the National Ethanol Conference in Orlando, Florida.

An already narrow deadline to complete a rule allowing such sales shrank last month during the 35-day government shutdown. EPA did not return a request for comment on whether the agency was considering such a waiver.

"It is kind of a Plan B," Censky said on the conference sidelines.

President Donald Trump directed the EPA last September to allow the sale of the higher ethanol blends year round in all markets. Waivers already exist for the now ubiquitous 10pc ethanol blend of gasoline, called E10. But E15 lacks a waiver of rules that restrict the sale of fuels more susceptible to evaporation during summer months.

The restriction has stunted retailer interest in major markets in offering the E15 blend. Historically low margins for ethanol to corn, export markets closed off by trade battles and rising US ethanol production have all added urgency for the industry to expand domestic market access.

EPA under previous administrations said such a change must come from congress and that the agency lacked rulemaking authority. Refined product trade groups, including the American Fuel and Petrochemical Manufacturers (AFPM), have said they would challenge such a rulemaking in court.

The enforcement waiver was an industry idea that USDA communicated to the EPA, Censky said. It was only an option now because it was the stated policy of the administration, he said.

Ethanol export talks meanwhile continued, Censky said. Trump and Chinese president Xi Jinping were working to set a meeting date in March to continue discussions on intellectual property theft and tariffs set by both countries on commodities. The White House could not be immediately reached for comment.

Negotiations continued on soybean and ethanol purchases, Censky said.

"We still have a long way to go," Censky said.

Ethanol exports last year reached almost 115,000 b/d from January to November, the most recent period of Energy Information Administration (EIA) data available. It was a 32pc increase from the same period of 2017 and the highest volume of exports in eight years of EIA data.

But the industry was confident that trade battles that have helped to slash commodity prices reduced those exports, especially to China.