EPA rules on issue pitting oil producers, corn farmers

The Trump administration is proposing to allow year-round sales of gasoline mixed with 15 percent ethanol, seeking to calm a dispute that has riled two politically important blocs -- the oil industry and corn farmers.

Tuesday's proposed rule change by the Environmental Protection Agency would fulfill a pledge that President Trump made to U.S. corn farmers, for whom ethanol is an important driver of demand for their crops. Many environmentalists oppose any expansion of the ethanol industry, saying the increase in corn production has polluted waterways and destroyed habitat.

Federal law for more than a decade has mandated that oil refineries mix ethanol into their fuel. The Trump administration's former EPA chief, Scott Pruitt, had angered lawmakers, growers and ethanol processors in Iowa and other key election states by granting a spate of exemptions sparing refineries from that mandate.

The dispute sparked a billboard campaign and at least one tractor rally by angry farmers in the Midwest last year, threatening to erode what has been a base of support for Trump.

Tuesday's proposal would allow sale of fuel mixed with a higher blend of ethanol year-round, ending a summertime ban imposed out of concerns for increased smog from the higher ethanol blend.

The proposal "absolutely is moving in the right direction," said Geoff Cooper, head of the ethanol industry's Renewable Fuels Association. Ethanol supporters would "keep a watchful eye" on the EPA's current administrator, Andrew Wheeler, as Wheeler weighs whether to grant future exemption requests from refineries, he said.

Beyond increasing the amount of ethanol allowed in vehicle fuel, the EPA is proposing regulatory changes in the ethanol program.

A group representing oil refiners and other oil industry partners, the Fueling American Jobs Coalition, spoke positively of the EPA proposal.

The Trump administration was striking "a careful balance between the need to maintain jobs and investment in the vital refining sector and the desire of some in the biofuels sector to expand the use of higher blends of ethanol," the oil industry group said in a statement.

Only a small fraction of U.S. gas stations currently sell the higher-ethanol blend, called E15. The rule, if the administration puts it into effect, isn't expected to have any big immediate effect on ethanol sales, but would signal the marketplace to take another look at the fuel blend in the longer term, Cooper said.

Environmental groups contend the U.S. Clean Air Act prohibits year-round sales of E15, and court challenges are expected.

Conservation advocates and some researchers say the ethanol mandate has been unexpectedly devastating for the environment. The increased demand for corn led farmers to plow millions of additional acres of land --depriving monarch butterflies and countless other species of habitat. Farmers also upped their use of nitrate-containing fertilizers, which pollute waterways.

Any future expansion of ethanol use "would expand corn production, resulting in more nitrogen fertilizer use, more pollution of waterways, and more losses in habitat," said Aaron Smith, a professor of agricultural and resource economics at the University of California, Davis.