EPA Lacks Power to Administratively Expand Ethanol Waiver

The Trump administration is considering expanding the ethanol fuel waiver in the Clean Air Act (CAA) to allow E15 fuel (gasoline containing up to 15% ethanol) to be sold year round. The Environmental Protection Agency has indicated that it has been exploring this action as well, and the ethanol industry has been lobbying for years in pursuit of this change. There’s just one problem: EPA does not have the authority to expand the waiver, only Congress can do so by changing the law.

The CAA explicitly states that during the “high ozone season,” which EPA defines as June 1^st to September 15^th, it is illegal to sell any fuel with a volatility measurement above a specified statutory level (42 USC 7545(h)(1)). The term for the measure of fuel volatility is Reid Vapor Pressure (RVP), and it is expressed in pounds per square inch (psi). Fuel volatility measures a fuel’s propensity to evaporate. Fuels that evaporate more readily contribute more pollutants to the air, which is why Congress elected to set a maximum volatility level. In nonattainment areas, or areas where pollutants regulated under the Clean Air Act exceed maximum levels, the CAA requires EPA to set maximum RVP levels below the standard maximum of 9 psi.

This CAA mandate represents a problem for fuel blends containing ethanol because ethanol is more evaporative than pure gasoline. Many ethanol blends cannot meet the RVP maximum of 9 psi (or the lower non-attainment psi maximum) and thus may not be sold during high ozone season. To allow for ethanol sales, Congress created a special waiver for certain ethanol blends (42 USC 7545(h)(4)). This waiver allows for a one pound allowance above the maximum RVP for fuel blends containing gasoline and 10 percent ethanol (so 10 psi rather than 9 psi for the standard RVP level). This waiver explicitly applies only to fuel blends containing gasoline and 10 percent ethanol, no others.

In recent years the ethanol industry received approval for and began selling fuel blends containing gasoline and 15 percent ethanol. However, according to the plain text of the CAA ethanol waiver, E15 does not qualify for the one pound RVP allowance. EPA recognized this distinction and continues the prohibition on the of the sale of E15 in large parts of the country during the high ozone season from June to September.

The biofuel industry argues that this is unfair and that E15 should be able to be sold year round. Whatever your opinion on the merits of that assertion, there is no question that as a statutory matter the ethanol waiver only applies to E10 fuel blends. While administrative agencies are given plenty of leeway to interpret statutory language that is ambiguous or unclear, this is not such a case. Congress allows the waiver only for E10. Thus, the EPA cannot administratively expand the one pound waiver to cover E15, Congress must change the law. Indeed there have been several pieces of legislation introduced to do just that.

Under the previous administration, a bad habit was developed of disregarding the plain language of statutes to push policy changes over the objections of Congress. This was rightly decried as illegal executive overreach, fundamentally undermining the rule of law. The Trump administration should refrain from developing a similar habit. If the ethanol industry wants to expand their Clean Air Act waiver, they need to get it from Congress.

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