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US Environmental Protection Agency aims to adopt new fuel economy rule by March, E15 rule by May

Washington DC — The US Environmental Protection Agency aims to adopt final rules for fuel economy standards by March and year-round sales of higher ethanol blends by May, according to a fall regulatory agenda released Wednesday by the Trump administration.

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The fuel economy rule is expected to increase US oil demand by 500,000 b/d, as efficiency standards for light-duty vehicles adopted by the Obama administration would be frozen for six years at the 2020 target of 43.7 miles per gallon.

EPA also aims to revoke California's long-held waiver to set its own tougher-than-federal fuel economy standards, which a dozen other states follow.

The proposal said booming US oil production has added new stable supply to the global oil market and "reduced the urgency of the US to conserve energy," one of the goals of the original fuel economy standards.

"The US is currently producing enough oil to satisfy nearly all of its energy needs and is projected to continue to do so or become a net energy exporter," EPA said.

EPA will close public comments on the fuel economy proposal October 23.

The announcement that EPA aims to propose changes formally to biofuels policy, including year-round E15, in February and approve them in May confirms a timeline first reported Monday by S&P Global Platts.

President Donald Trump last week touted in a campaign rally in Iowa that he was "unleashing the power of E15 to fuel our country all year long. Not eight months. All year long."


The sale of E15, or gasoline blended with 15% ethanol, is currently restricted in the summer months because of gasoline volatility rules.

Trump directed EPA to authorize year-round E15 sales and to develop new rules to increase transparency in Renewable Identification Numbers markets.

The E15 expansion and RINs trading changes are not expected to have an immediate impact on fuel prices or trade flows as they will have to undergo a long rule-making process, and oil refiners have already promised to challenge the policy in court.

Among the RINs changes, the White House asked EPA to consider banning anyone but obligated parties from buying separated RINs, requiring public disclosure when RIN holdings exceed specified limits and limiting the time a non-obligated party can hold RINs.

High gasoline prices have become a political liability ahead of the US midterm elections, and Trump's previously unfulfilled promise to approve year-round E15 was threatening to hurt Republicans in farm states.

Trump said approving year-round E15 would lower drivers' costs at the pump.

The fall regulatory agenda also showed EPA aims to meet the November 30 deadline for setting final blending volumes for the 2019 biofuel mandate and 2020 biodiesel mandate.

In July, EPA proposed requiring refiners to blend 19.88 billion gallons of biofuel into gasoline and diesel supplies in 2019, up 3% from the 2018 mandate. The 2019 proposal includes 4.88 billion gallons of advanced biofuel and an implied requirement for 15 billion gallons of conventional ethanol. EPA proposed a 2020 biodiesel mandate of 2.43 billion gallons, a target that is set one year ahead.

--Meghan Gordon,

--Edited by Jonathan Dart,