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By Jarrett Renshaw and Stephanie Kelly
(Reuters) - The White House will approve a request from a group of Midwest governors to allow year-round sales of gasoline with higher blends of ethanol, but will push the start date into next year, two sources familiar with discussions said.
The decision will likely be bittersweet for the biofuel industry, which wants to expand sales of corn-based ethanol but might be frustrated by the 2025 start date. The one-year delay could put off any potential localized price spikes and supply issues that the oil industry says could arise from the decision until after the U.S. election, the sources said.
Under the plan, the administration would grant a 2022 request from the governors of Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin to allow year-round sales of E15, or gasoline with 15% ethanol, starting next year, the sources said. In the meantime, the EPA could issue a temporary waiver enabling such sales as needed.
Wisconsin and Minnesota are battleground states in this year's presidential contest in November. Inflation and the economy are key vulnerabilities for President Joe Biden's re-election campaign.
The U.S. government restricts sales of E15 gasoline in summer months due to environmental concerns over smog.
The administration is expected to issue a decision by late March, the sources said.
The EPA declined to comment for this article, as the rule is still in an interagency review process.
The EPA had sent a final rule on the proposal to the White House in December with an effective date of April 28, 2024. The new timeline would push the effective date to 2025, the sources said.
For years the ethanol industry has pushed to lift the restrictions on E15 sales nationwide, arguing the environmental impacts have been overstated.
The request from the Midwestern states has been controversial, however, as oil refiners including HF Sinclair Corp and Phillips 66, have warned that a patchwork approach to approving E15 sales would complicate fuel supply logistics and raise the risk of spot shortages.
Ethanol groups say they would prefer a nationwide legislative fix to allow for expanded E15 sales, versus the regional approach.
(Reporting by Jarrett Renshaw and Stephanie Kelly; Editing by Alistair Bell)
