COUNCIL BLUFFS — President Donald Trump chose the setting for his announcement in October of federal plans to allow 15 percent ethanol blends of gasoline year-round, picking this city on the borders of the top two ethanol-producing states.
His Iowa-Nebraska speech at the Mid-America Center here was a shot in the arm for corn farmers who had been whipsawed by Washington’s trade disruptions with major customers, including China and several allies.
But making E15 possible nationwide requires more than a presidential act.
The Environmental Protection Agency must set a regulatory framework for how the often-cheaper blend should be handled by gasoline retailers.
The federal rule-making process typically takes months of staff time.
The president’s pledge to have E15 rules and regulations ready for the fuel to be sold in time for this summer’s driving season, which starts June 1, was already on a tight timeline. That’s before the standoff between the president and Congress over funding for a wall along the border with Mexico and the partial government shutdown.
Much of the EPA staff that would be working to pave the way for the 15 percent ethanol blends have been furloughed during the shutdown, leading to concerns that the agency won’t have the ability to hammer out the new guidelines in time for the June rollout.
The EPA, in a statement to The World-Herald and others, said it would finish the regulations before this summer’s driving season.
“The ongoing partial shutdown will not impede EPA’s ability to keep to our deadline,” said Michael Abboud, an agency spokesman.
But the EPA statement contradicted a Reuters and CNBC report that cited at least two lawmakers who said they had been told by EPA officials that the shutdown was delaying progress on the E15 rules.
Corn and ethanol producers in Nebraska and Iowa are getting worried that a skeletal staff at the EPA might not be able to get the proposed policy ready for the February or March release it needs to survive a 30- or 45-day public comment period and expected legal challenges from the oil industry.
The timeline is getting serious, even though a lot of work on the rules was done before the shutdown, said Dawn Caldwell, who heads government affairs for the Aurora Co-Op, a Nebraska-based business that sells goods and services to farmers and ranchers at 82 locations in seven states.
“We definitely need this done right,” she said. “To be fully prepared and legal by June, we’re approaching a challenge.”
Sen. Chuck Grassley, R-Iowa, said the exact timing of when the shutdown needs to end to allow enough time for the rule-making isn’t clear. But the EPA has told him that it plans to get the rules done in time to meet the June deadline, he said.
Sen. Joni Ernst, R-Iowa, who serves on the Environment and Public Works Committee, which oversees the EPA, brought up the E15 situation when she met privately Thursday with acting EPA chief Andrew Wheeler, she said. Wheeler has been nominated to permanently head the agency, a nomination that will be reviewed by Ernst and the rest of the committee.
“The president has said we will have E15 year-round, and I’m going to hold Andrew Wheeler’s feet to the fire in that regard,” Ernst told reporters. “Even though we have a government shutdown, he knew and understood the president’s push to have this done by about that May time frame so that consumers could purchase E15 during the summer months. ... Really in my mind, there’s no room for excuses there.”
And Sen. Deb Fischer, R-Neb., delivered a Senate floor speech in which she said reports of a potential delay in the E15 rollout were causing anxiety among some corn and ethanol producers. She sought to allay the concerns.
“I would like to reassure our fuel producers that this is simply not true,” Fischer said of a possible delay, pointing to the EPA’s statement that it would meet its E15 deadline.
Timing matters because June, July, August and the first half of September are the biggest months for American gasoline use, industry statistics show. E15 is already available at about 1,700 gas stations in 30 states, said Chris Bliley, vice president of regulatory affairs at Growth Energy, a national ethanol and biofuels trade group that lobbies for ethanol expansion.
Another reason June 1 is important is because current rules and regulations require some retailers who sell E15 to label E15 pumps for flexible-fuel vehicles only during the summer months, based on concerns about the blend’s ability to increase smog, concerns the EPA no longer expresses, said Jim Stark, vice president of investor relations at Omaha-based Green Plains Energy Inc. His company produces about 1.1 billion gallons of ethanol a year at 13 plants in Nebraska, Iowa and five other states.
The EPA under the Obama administration said E15 was safe for use in almost all vehicles built in 2001 or later. Several automakers, in a report backed by the oil industry, cited some concerns for vehicles built before 2012.
The pace of change toward E15 is important because corn farmers like Guy Mills, who farms about 3,800 acres around Ansley, Nebraska, say they feel squeezed on several sides — with trade disruptions amid a spat with China and a newly signed farm bill to prepare for.
Regulatory certainty for E15 would give corn farmers and ethanol producers greater ability to plan their planting and purchases, Mills said. The policy could lead to 2.5 billion more bushels of ground corn, according to estimates.
And it could give the more than 138,000 gasoline retailers nationwide who haven’t yet sold E15 the confidence to offer a product that often sells for about 5 to 15 cents a gallon less than traditional E10, or 10 percent blends. For retailers, the higher-ethanol blends often improve their profits on fuel.
“We need EPA to step up, even though they have a skeleton crew,” Mills said. “That’ll send a message to retailers that it’s OK to sell E15.”
If the draft rules aren’t released in February, producers and ethanol industry observers will worry, said Pam Miller, director of industry and investor relations at Siouxland Ethanol, which produces about 90 million gallons of ethanol a year at a plant near Jackson, Nebraska.
Farmers, many of whom support the president, believe that he will come through for them, she said. The question is whether either side in Washington, the president or the Democratic-led House of Representatives, will blink to end the shutdown.
“We do have President Trump’s word,” Miller said. “He made a huge promise on this, right here in Council Bluffs. For him to not be able to deliver on that promise, he would suffer consequences in 2020.”
Chuck Woodside, chief executive officer of KAAPA Ethanol in Minden, Nebraska, said most rank-and-file farmers “really thought that when Trump said he was going to E15 year-round, that it was a done deal.”
Now, he said, “I’m still optimistic, but I’m less confident every day in getting things done in Washington as a whole. From my seat in central Nebraska, it looks dysfunctional.”