Energy groups are still negotiating legislation to expand access to a higher-ethanol gasoline blend and rein in refiners' ability to skirt biofuel mandates, as a looming funding impasse adds urgency to the talks.
Negotiations that include the American Petroleum Institute (API) and the ethanol advocates Growth Energy and the Renewable Fuels Association continue, three people familiar with the talks told Argus. The hope is to reach some compromise on a bill that could revamp retail fuel markets in the US and convince lawmakers to add it to a larger package, potentially legislation to fund the government after 30 January.
The powerful oil group withdrew support for a slimmer bill last year that would have allowed year-round sales of gasoline with 15pc ethanol (E15) and is pushing instead for a broader package that would make it harder for small refineries to win hardship exemptions from annual biofuel mandates.
President Donald Trump's administration granted dozens of those hardship requests last year and floated making companies without exemptions blend more biofuels to compensate, unnerving oil majors and reshuffling the E15 debate.
Smog rules separately limit summertime sales of E15 in most of the country without emergency waivers, which advocates say has deterred retailers from investing in new infrastructure. Most US gasoline is sold as a 10pc ethanol blend.
The API and the ethanol groups agree on the general framework of a bill that would authorize E15 year-round and limit future exemptions from biofuel mandates, including by preventing larger refiners that own small units like Delek and Par Pacific from requesting relief. The groups plan to support adding new exemption provisions to existing E15 bill text rather than push lawmakers to scrap that draft, two people familiar with the talks said.
But there are still thorny issues to resolve — such as the effective date for any changes — and some provisions risk riling energy and farm interests otherwise on board with reining in exemptions.
Adding to, rather than replacing, the current E15 bill would, for instance, keep a provision effectively compensating some small refineries for past biofuel mandates. That draft would return compliance credits to certain refiners and — unlike current rules where credits expire — allow their use in future years. Even small facilities can spend tens of millions of dollars each year buying enough credits to comply with the mandates, and returned credits usable indefinitely would be even more valuable.
Eligibility is limited to small refineries that retired credits to meet biofuel mandates in 2016, 2017 or 2018 and had hardship petitions outstanding to start December 2022, as well as companies that complied with 2018 quotas and had petitions denied before July 2022. EPA exemption data those years is limited, making it unclear which companies would benefit.
Calling on Congress
The groups working on revised bill text have another challenge: convincing Congress to act.
Growth Energy, the Renewable Fuels Association and dozens of other farm and biofuel groups urged Congress to pass some E15 fix "as soon as possible" in a joint letter to House and Senate leaders on Wednesday, a nod to the looming deadline to fund the government before a potential shutdown later this month.
E15 legislation is unlikely to pass on its own, so lobbyists are closely tracking the legislative calendar for opportunities to add it to larger packages. The letter does not mention the API talks, which are proceeding separately.
Small refiners worried about losing access to relief — at the same time as the Trump administration readies what could be record-high biofuel quotas for the next two years — will also press sympathetic lawmakers.
Notably, a statement accompanying a bipartisan appropriations bill draft released this week recommends that EPA rethink "policies and procedures" for exemptions in response to a 2022 Government Accountability Office analysis that criticized the agency's approach. That watchdog report questioned EPA's argument that small refineries can easily pass on the costs of meeting biofuel mandates in fuel sales.
Energy lobbyists noted that the statement's recommendations are nonbinding and that similar language around exemptions has appeared in past statements accompanying appropriations bills. But it signals that some members of Congress might oppose any changes to fuel policy that could raise costs for refineries in their districts and states.
