Iowa and Nebraska sue EPA to end E10 volatility waiver

Attorneys general in Iowa and Nebraska have filed suit against the U.S. Environmental Protection Agency to force it to end the federal waiver for a common ethanol blend to be sold during the summer in those states.

Here’s the idea behind the lawsuit: Eliminating that waiver would force refiners to reduce the volatility of gasoline that is blended with ethanol to produce E10, which is 10% ethanol and dominates the fuel market. If that happens, the blends could be increased to 15% ethanol without violating federal summertime fuel standards.

That has the potential to be a boon for the ethanol industry, which is important for Iowa farmers because more than half of their corn is used to produce the fuel. State lawmakers adopted legislation last year to require gas stations to sell E15, with some exceptions.

But the change also has the potential to increase the cost of fuel and diminish available supplies, the EPA has concluded.

Governors in eight states asked the EPA in April 2022 to eliminate the waiver for E10 in their states — citing the increased pollution caused by evaporation of the fuel during warm months — as a maneuver to boost E15 sales. Kansas and North Dakota later rescinded their requests, while Missouri and Ohio joined the effort.

E10 has had a federal volatility requirement waiver since 1990, and since then its sales have ballooned. More than 98% of gasoline sold in the United States is E10, according to the Department of Energy.

In 2019, the EPA extended that waiver to E15, but a federal appeals court rejected the move in 2021 and said the agency lacked the authority to make the change. The EPA issued emergency waivers to allow summertime E15 sales in 2022 and 2023.

The agency proposed a rule change in March that grants the states’ requests to cease the E10 waiver starting in 2024, but it has not finalized it.

“The EPA is already over a year late in finalizing the E15 decision,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association, which lobbies for ethanol-friendly policies. “Any further delay could jeopardize access to E15 during the 2024 summer.”

It’s unclear what has delayed the rule change. The agency declined to comment for this article because of the pending lawsuit, which was filed Monday.

In its proposed rule, the EPA estimated the change could cut fuel supplies to the states by about 2%. That’s because refineries would likely remove butane from the gasoline to make it less volatile. There are also uncertainties about how quickly the companies that produce and distribute the fuels can adjust their procedures.

“All of this can have significant impacts on gasoline supply not only on the petitioning states, but also on the surrounding states,” the agency said, noting that it didn’t propose to initiate the change this year because it “would result in an insufficient supply of gasoline in those states.”

Despite EPA predictions that the change will increase the cost of the blended fuel and reduce supply, the attorneys general in Iowa and Nebraska claim the opposite.

“The Biden Administration knows that increasing access to E15 will help consumers obtain some relief from the rising cost of gasoline, provide support for our farmers, and strengthen U.S. energy security during a turbulent time,” Nebraska Attorney General Mike Hilgers said.

Iowa Attorney General Brenna Bird noted that it has been more than a year since the EPA was required to act on the governors’ requests. “The Biden Administration has dragged its feet long enough,” she said.

Bird and Hilgers are Republicans, whereas President Joe Biden is a Democrat. Several of the other governors who petitioned for the change in their states are Democrats, but those states have not joined the lawsuit.

A spokesperson for Bird did not immediately respond to a request to comment for this article.

The lawsuit seeks a court order that directs the EPA to finalize the rule change by the end of this year.

This article first appeared in the Iowa Capital Dispatch, a sister site of the Nebraska Examiner in the States Newsroom network.