UAI’s comments on the REGS Rule could be a true game changer

by Dave Vander Griend, President of Urban Air Initiative

For decades, EPA has insisted that it gets to decide how much ethanol can be used in gasoline. If ethanol producers want to sell higher ethanol blends to ordinary vehicles, they must ask EPA for permission. Until recently, EPA said no more than 10%. In 2011, EPA said 15% in some vehicles, but not others. But EPA has no legal authority to impose these caps on ethanol’s concentration.

Urban Air Initiative, along with a coalition of environmental organizations, ethanol producers, and farmers’ unions, recently filed comments telling EPA that its regulatory ruse has gone too far. Contrary to EPA’s assumption, Congress did not intend for EPA to stand guard over every added drop of ethanol in gasoline.

The occasion for Urban Air Initiative’s comments was EPA’s latest bittersweet bargain for ethanol, the proposed Renewable Enhancement and Growth Support Rule, or “REGS Rule.” In the REGS Rule, EPA agreed not to impose certain compliance burdens on ethanol used in flex-fuel vehicles. In exchange, the ethanol industry would have to accept a slew of new fuel regulations, including a cap that would limit ethanol to no more than 15% in all but flex-fuel vehicles.

If this seems like a raw deal for ethanol, that’s because it is. Flex-fuel vehicles account for only 6% of the vehicle market, and their share is not growing. That is partially due to EPA’s decision to phase-down flex-fuel vehicle credits starting in 2015 (EPA has replaced them with generous credits for electric vehicles). And while the market for flex-fuel vehicles steadily declines, EPA could continue to block the use of midlevel ethanol blends in all other vehicles. Thus, although the REGS Rule’s goal is to “facilitate further expansion of ethanol blended fuels,” in the long-term, the Rule will probably have the opposite effect on ethanol’s market share.

That is why Urban Air Initiative and its partners are tossing EPA’s playbook out the window, and going on the offensive. Urban Air Initiative’s comments explain that EPA’s asserted authority to control the concentration of ethanol is based on a misinterpretation of the “sub-sim” law, section 211(f) of the Clean Air Act. That law requires the individual components of market fuel to be “substantially similar” to the components of a test fuel used to test new vehicle emissions. And since ethanol is already a component of a test fuel used to test new vehicle emissions, EPA’s interpretation ignores the clear language of the statute and fails to further the REGS Rule’s purported goals.

EPA’s misinterpretation of the sub-sim law turns the statutory scheme designed by Congress upside down. In section 211(c) of the Clean Air Act, Congress allowed EPA to control the concentration of existing additives, but only after using scientific evidence to determine if they pose a health risk or damage emission controls. By focusing on the sub-sim law, EPA has ignored 211(c). Under that section, EPA actually bears the burden of proving that ethanol is harmful, but EPA has instead placed the burden of proving the safety of every added drop of ethanol on the ethanol industry. This defies the will of Congress and the courts’ past admonishment against interpreting the sub-sim law to circumvent the requirements of section 211(c).

Correcting EPA’s interpretation of the sub-sim law would provide immediate relief for the ethanol industry. EPA would no longer wield the Clean Air Act to deter the sale of midlevel ethanol blends. And while EPA could control ethanol based on evidence of environmental harm, such evidence is unlikely to be forthcoming: the evidence overwhelmingly demonstrates that ethanol reduces vehicle pollution and increases vehicle efficiency.

The widespread availability of higher ethanol blends would also encourage the development of vehicles optimized to take advantage of ethanol’s high octane value. The production of these vehicles would foster a competitive and sustainable path for future growth of the ethanol industry.

The stakes couldn’t be higher. Our industry, Autos, and EPA all know that higher blends of ethanol work well in todays and future vehicles providing performance, lower emissions, reduction in greenhouse gases, local jobs, and energy security.  It’s time to resist EPA’s control on the market with its random regulations that do not follow the intent of the law.